The Hindu Business Line : Global oilseeds may rule firm on lower soya crop

GLOBAL oilseeds and vegetable oil markets are unlikely to see a softening of prices anytime soon because of increasing tightness in supplies despite record production in 2003-04. The current firmness could primarily be attributed to a lowering of the soyabean crop estimate for South America.

Brazilian soyabean output is currently estimated at 56 million tonnes, down 3.5 mt from last month and down 5 mt from the season's first estimate of 61 mt because of drought-reduced yields in the Southern-producing region. For Argentina and Paraguay, too, output is reduced by a combined 2 mt following reduction in yield estimate due to dry weather during the growing season.

Interestingly, despite these crop losses, global production of major oilseeds in 2003-04 is still projected at a record 338.3 mt compared with 329.5 mt last year. Global vegetable oil production is now estimated at 101.1 mt (94.7 mt) while consumption is placed at 100.6 mt (95.8 mt), by the US Department of Agriculture (USDA).

In its latest World Agricultural Supply and Demand Estimates, USDA has further reduced global oilseeds stocks to 36.8 mt compared with 43.2 mt in 2002-03. The reduction is due to lower stocks of soyabean in South America, reflecting the sharply lower projected soyabean production.

High oilseed prices are expected to cut the quantity that would be crushed worldwide as a result of squeeze in processors' crush margins. In the US, the season-average soyabean prices are likely to be in the range of $7.40-7.80 per bushel, the highest level in 20 years.

World soyabean production in 2003-04 is estimated at 193.4 mt (197.3 mt) while trade is placed at 62.5 mt and end stocks at 33 mt. The US (65.8 mt), Brazil (56 mt), Argentina (35 mt) and China (16.2 mt) are the principal producers. China's bean import during the year is projected at 20.5 mt.