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Cold weather may freeze India's rapeseed output, spur imports
January 8, 2014 / 8:04 AM / in 4 years

Cold weather may freeze India's rapeseed output, spur imports

* Rapeseed plantings rise, but extreme cold threatens yields

* Cold weather to continue in top producing state Rajasthan

* India may need to raise edible oil imports to fulfil demand

By Rajendra Jadhav

MUMBAI, Jan 8 (Reuters) - India’s rapeseed production is unlikely to rise in 2014 despite increased plantings as cold weather in the top producing region is seen denting yields, forcing the country to raise imports of palm and sunflower oil.

After a poor harvest of soybeans, the world’s biggest edible oil importer was relying on rapeseed output to arrest rising imports. Without any rise in rapeseed production, India will be forced to increase imports - which cost it a record $11.3 billion last fiscal year - from May onwards.

“Rapeseed production would be more or less steady around last year’s level,” said Praveen Khandelwal, vice president of corporate strategy at Gokul Refoils & Solvent Ltd, the biggest rapeseed processor in the country.

India produced 6.4 million tonnes of rapeseed - also known as mustard seed - in 2013.

The area planted with rapeseed has risen to 6.97 million hectares this year from 6.5 million hectares a year ago, as farmers took advantage of monsoon-soaked land to grow the crop, which is more lucrative than the usual chickpea.

Based on the higher acreage, industry officials had been expecting as much as a 7.7 percent rise in production.

But a sharp fall in temperatures over the past two weeks in the rapeseed growing north-western region of the country - in some some places near 0 degrees Celsius - has stunted vegetative growth and in a few areas hurt flowering.

“In some areas, especially in the northern part of the state, there are reports of crop damage. It is difficult to quantify,” said a senior official at the agriculture department of the desert state of Rajasthan, which accounts for more than half total output.

“If the temperature remains below normal level for another two weeks, as forecast by the weather department, then yield may go down,” said the official, who was not authorized to speak to the media.

The weather department expects extreme cold weather in the area at least for the next week and thundershowers in the next three days.

“Crop cultivated in rainfed areas and early-sown crop is likely to be affected by the cold wave and ground frost, but in other areas we can expect normal yields,” said Dhiraj Singh, director at the Directorate of Rapeseed-Mustard Research.

“So far we have seen the impact of the cold wave only in small pockets,” Singh said.

India’s edible oil imports are steadily increasing due to rising prosperity and population growth. In the 2012/13 marketing year ended on Oct. 31, imports surged to 10.4 million tonnes, compared with 5.6 million tonnes just five years back.

The south Asian country fills more than half its edible oil demand through imports, consisting mainly of palm oil sourced from Indonesia and Malaysia. It also buys soyoil from Argentina and Brazil, and sunflower oil from Ukraine.

“Rapeseed output is a key in determining edible oil imports. If it fails to increase, then there is no choice but to raise imports,” said Badruddin Khan, associate vice-president of research at Indiabulls Commodities.

The rapeseed futures contract for January delivery on the National Commodity and Derivatives Exchange fell more than 5 percent in December on expectations of a bumper output. It has rebounded 3 percent so far in January as the weather outlook has become more unfavourable.

Reporting by Rajendra Jadhav; Editing by Richard Pullin

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