The Hindu Business Line : Record global oilseeds output to impact prices

SPURRED by high prices and higher anticipated acreage, global oilseeds output in 2004-05 is projected to set a new record. Significant gains are expected to be recorded by soyabeans in major origins, the US and South America.

The projected high production for oilseeds together with growth in palm oil production is sure to send a strong price signal to the market.

Since last October, global oilseeds and vegetable oil prices have been ruling rather strong, despite a delicate balance between the year's production and consumption.

However, the progress of planting and eventual crop outturn by September has to be watched.

Weather aberrations have often caused yield and output losses as in 2003-04.

In its latest report, the US Department of Agriculture (USDA) has projected global oilseeds production in 2004-05 (October-September) at a record 378 million tonnes (mt), an increase of 42 mt from the current year.

"Most of the gain will be from soyabeans, with crops in the US and South America projected to recover from weather, disease and insect problems experienced in 2003-04," USDA said.

In the US, oilseeds production for 2004-05 is projected at 90.2 mt, up close to a fifth from the current year.

Soyabean production will of course account for most of the gain and is currently projected at 80.7 mt (2,965 million bushels), up 23 per cent from the weather hit output of 2003-04.

Last two years, US soyabean crop had suffered damage due to weather aberrations forcing a reduction in estimate of crop size.

From 78 mt in 2001-02, production declined to 75 mt the following year. In 2003-04, the US crop suffered a major setback when output plummeted to 66 mt, setting off a price spiral in the global market.

For 2004-05, projection for soyabean production is based on area reported in prospective plantings and trend yields, according to USDA.

An indication of the impact of higher production on the market is already available. The US season-average soyabean price for 2004-05 is projected at $5.85 to $6.85 per bushel, compared with $7.65 per bushel in the current year.

Both soyameal and soya oil prices are forecast to decline.

Apart from the US, China and India are important origins for the global oilseeds market.

Crop progress in these two Asian countries will also be watched carefully, so will palm oil production in Malaysia and Indonesia.

Meanwhile, for the current year 2003-04, world production of major oilseeds is estimated at 335.8 mt Brazil's soyabean crop is now estimated even lower at 53.5 mt and that of Argentina too lower at 34 mt reflecting the impact of dry weather.