The Hindu Business Line : Vegoil production likely to scale new peak

DESPITE a projected decline in the US, global soyabean output is forecast to rise in 2005-06, albeit marginally. The forecast is subject to a strong rebound in Brazilian soyabean production due for harvest by early next year.

Global oilseeds production for 2005-06 is projected at 377 million tonnes, down 4.1 mt or by one per cent from 2004-05, the US Department of Agriculture (USDA) has said in its latest World Agricultural Supply and Demand Estimate.

World soyabean production is forecast to rise to a record 219.7 mt (216.3 mt) despite expectation of a decline in the US production to 78.8 mt (2,895 million bushels) from the record 85.5 mt (3,141 mbu) of 2004-05, following reduced acreage and yield returning to the trend level of 39.9 bu/acre (42.5 bu/acre).

For 2005-06, while the production forecast for Argentina is unchanged from the previous year's 39 mt, Brazilian harvest is forecast at 62 mt (53 mt) with the expectation of a rebound in yields. In the current year, the crop in Brazil suffered twin effects of drought and rust, which the USDA hopes will not recur.

China's soyabean production is projected at 17 mt, down from 18 mt of 2004-05. The country will play an increasingly important role in impacting global oilseeds, oilmeals and vegetable oil market next year with projected overall increase in oilmeal demand of 8 per cent and soyameal demand of 15 per cent. Importantly, USDA has steeply raised soyabean import requirement for China in 2005-06 to a new high of 27 mt, compared with import of 22.8 mt in 2004-05 and 16.9 mt a year earlier. The country continues to be the world's largest importer of both oilseeds and vegetable oils.

The report projects India's soyameal production at 4.4 mt and exports at 2.1 mt for 2005-06, an improvement over the previous year's 3.7 mt and 1.7 mt respectively. In 2003-04, India produced 4.4 mt of soyameal, exports from which constituted 3.3 mt.

Spurred by higher oilseeds production and crushing as well as increase in palm oil supplies, global vegetable oil production in 2005-06 is slated to reach a new high of 111.4 mt, up from 107.9 mt while consumption is projected to rise 5 per cent to 110.4 mt (105 mt) following expansion in the requirement of China, India and the European Union.

Weather over the next three months would play a crucial role in determining the direction of the world vegetable oil market, which is looking for leads.

The effect of Asian rust on the US soyabean crop as also overall oilseeds crop progress in China and India need to be watched. Funds have turned cautious, as the market has become weather-driven.

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