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India's rapeseed output to rise, may help curb import bill

Source : REUTERS
Last Updated: Thu, Nov 21, 2013 14:21 hrs

* January temperatures hold key to output

* Higher rapeseed oil supply to cut import demand

By Ratnajyoti Dutta

NEW DELHI, Nov 21 (Reuters) - India could produce up to 13 percent more rapeseed oil in 2014 as farmers take advantage of monsoon-soaked land to grow the more lucrative crop, traders said, which would help curb imports and its trade deficit.

Rape needs damper conditions than do other crops such as wheat or guar gum, and this year's monsoon was heavier than in 2012.

Traders expect rape acreage to rise by 4.5 percent to 7 million hectares and output of rapeseed to reach 6.7 million tonnes from 6.4 million.

That would boost rapeseed oil production by 13 percent to 2.6 million tonnes, they estimate.

Increased domestic rapeseed output could help India, top global importer of edible oils, rein in its purchases of palm oil from Indonesia and Malaysia next year.

"Rapeseed oil supplies could be about 300,000 tonnes more in comparison to last year," Sandeep Bajoria, chief executive of the Mumbai-based Sunvin Group, said.

India's edible oil demand totals 17-18 million tonnes a year and is growing by 3 to 4 percent a year. Imports usually account for about 60 percent of consumption and weigh on its bulging current account deficit.

Rapeseed planting usually starts from October in the world's third-biggest producer after China and Canada, and farmers have already planted over 4.5 million hectares. The harvest starts from February.

Prices are already up 7 percent from the start of the planting season, with levels quoted in Rajasthan at 36,550 rupees ($580) per tonne.

The desert state of Rajasthan is the main producer of rapeseed, providing more than half of total output. But in last year's drier conditions, many farmers turned to guar, which requires less rain and has been in strong demand due to its role in the extraction of shale gas.

Rapeseed produces both oil and meal, making returns better than wheat, which also needs more rainfall while it grows.

"Rapeseed is preferred this year over other winter crops like wheat and guar," said Deepak Kanda, president of the Shri Ganganagar Oil Millers Association in Rajasthan.

Some traders voiced concerns, however, that cold weather could still crimp rapeseed output.

"Weather conditions in January will hold the key to the crop's output size," said Govindbhai G. Patel, managing partner of G G Patel & Nikhil Research Co.

Annual demand for cooking oils in Asia's third-largest economy is growing by at least half a million tonnes a year as it adds about 19 million people to its population and its middle class becomes increasingly wealthy.

India's cooking oil imports rose 4 percent to a record of 10.4 million tonnes in the year to October. ($1 = 62.545 Indian rupees) (Editing by Jo Winterbottom and Jane Baird)



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