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Soybean yields suffer; more Malaysian palm oil imports

India's soybean yields suffer; more Malaysian palm oil imports?

Thursday, 17 September 2015

NEW DELHI: India's soybean yields are likely to drop this year as the first back-to-back drought in three decades wilts crops, offseting an increase in the area under cultivation and keeping output of the oilseed steady near year-ago levels, industry sources said.

In the absence of higher oilseed output, India could be forced to import more vegetable oils to meet growing domestic needs. The country is already the world's No.1 buyer of edible oils, with palm oil from top producers Indonesia and Malaysia accounting for most of the arrivals.

"We were a little more optimistic about this year's (soybean) production but now it's almost certain that we'll not cross last year's level," said B.V. Mehta, executive director of the Mumbai-based trade body Solvent Extractors' Association (SEA), citing deficient rains as the key reason.

Rains are critical for summer crops like rice, cane, corn, cotton and soybean, with only half of the country's farmlands having irrigation facilities. In fact, the soybean crop is planted only when the monsoons start in June. Last year, the country had produced about 9 million tonnes of the oilseed.

This year there were hopes that output would climb given an acreage of 11.4 million hectares, versus a total of 11 million hectares in 2014. But rainfall has played spoilsport.

Rains were 16 percent below average over the four-month monsoon season due to an El Nino weather pattern, which can lead to scorching weather across Asia and east Africa but heavy rains and floods in South America. This follows a 12 percent shortfall in rains in 2014, making this only the fourth time India has seen back-to-back drought years in over a century.

"If our soybean production doesn't rise in proportion to the (higher) acreage, edible oil imports are likely to go up by at least 200,000 tonnes," Rajesh Agrawal, chief coordinator of the Soybean Processors Association (SOPA) of India said.

Other traders and industry officials pegged a possible rise in imports for the year starting November at 200,000-400,000 tonnes. Imports so far in the current marketing year are at 11.7 million tonnes, up 23 percent from a year ago.

While SOPA did not provide any output estimates, its chairman, Davish Jain, said a slow start to the monsoons had delayed plantings in the Malwa region of the top producing Madhya Pradesh state while water logging due to recent heavy rains there had led to pest attacks.- Reuters