The Hindu Business Line : Record world oilseeds output forecast this year

IN what is seen as a generous projection for next year, the US Department of Agriculture (USDA) has forecast a record world oilseed output of 379.1 million tonnes (mt) for 2004-05, a remarkable 43.2 mt increase over 335.9 mt

estimated for 2003-04.

A significant part of the global production increase will come from soyabean. Forecast of this crop is placed at a new high of 224.6 mt, versus weather and disease-affected 189.1 mt in 2003-04.

All the three major origins — the US, Brazil and Argentina — are forecast to harvest record soyabean crop, with higher acreage driven by attractive prices over the last eight months.

Soyabean output forecast for the US is 2.94 billion bushels, equivalent to 80 mt as against 65.8 mt of the previous year. South American soyabean crop is set to cross the 100 mt mark in 2004-05. Brazilian output is projected at a record 66 mt (52.6 mt) and Argentina at 39 mt (34 mt).

In anticipation of record crops, prices of oilseeds and vegetable oils have begun to soften. Long liquidation at the bourses has imparted a certain weakness to prices. The palm complex is also under pressure for the same reason.

Reflecting high oilseeds output, global vegetable oil production in 2004-05 is projected at a new high of 105.6 mt (101.2 mt), while use is placed at 104.7 mt (100.3 mt). End-stocks are expected to remain largely unchanged at 6.6 mt

Over 10 weeks remain for the condition of oilseed crops in major origins such as the US, China and India to crystallise. The production forecasts are, obviously, subject to weather across the world holding well.

However, not all is well with the Indian kharif 2004 oilseeds crop. Concerns over aberrant monsoon and its adverse impact on output have already begun to be felt. While it may be premature to make any precise estimate, oilseeds output in 2004-05 could potentially decline by as much as 30 lakh tonnes from the previous year, equivalent to about 10 lakh tonnes of vegetable oil.

Weather conditions in India can prove positive for supplies and prices of major producers such as Malaysia and Indonesia.

Meanwhile, the vegetable oil industry and trade is having an anxious time over the delay in revision of tariff values. Many are irked by the non-transparent manner of revising tariff values. A reduction in tariff value on various vegetable oils looks imminent.

Although the transaction value of imports is lower, importers end up paying customs duty on the tariff value (higher than market price) fixed by the Government.