MARKET DEVELOPMENT
El Nino May Impact Production of Oilseeds & Step up Imports in 2014-15
El Nino May Impact Production of Oilseeds & Step up Imports in 2014-15
24/06/2014 (fnbnews.com) - With the forecast of El Nino developing, there is a likelihood of its impact on the Indian monsoon, and thereby on oilseeds production. India’s dependence on the import of edible oil to meet its requirements is growing, and in case the oilseed crop is affected owing to the poor monsoon, the imports would surge.
In all the three El Nino years of the last decade, deficient rainfall has impacted oilseeds production, and thereby vegetable oil imports and oilmeal exports. El Nino adversely affects rainfall and leads to drier conditions in India, South-east Asia and Eastern Australia, and wetter conditions in South America and the southern United States.
The production of four major rain-fed oilseeds - namely groundnut, soybean, sesame and castor - is susceptible to El Nino, as even minor variations in rainfall deviates the arability of these crops. With production likely to be impacted, oilmeal exports may also get affected.
“If rainfall this year is lower than 90 per cent of the long-range forecast, these crops would be affected adversely. However, distribution and regular spells have a greater bearing on oilseed crops than the absolute quantum of rainfall,” said Raju Choksi, vice-president, agri-commodities, Anil Nutrients Ltd.
“The demand-supply mismatch during the peak season could also bring in unwanted volatility in price of these oilseeds across major markets,” he added. Choksi added that in case of a major El Nino developing, oilseed production in India and palm oil production in Malaysia and Indonesia would take a hit.
However, wetter conditions in South America and the United States may prove beneficial to the soybean crops in these countries.
As per data available from Indian Meteorological Department, in 2004 and 2009, the country faced severe drought as monsoon was below normal by 13 per cent and 22 per cent, respectively.
During both years, oilseeds production was down, and consequently, vegetable oil imports and oilmeal exports too were affected.
In all the three El Nino years of the last decade, deficient rainfall has impacted oilseeds production, and thereby vegetable oil imports and oilmeal exports. El Nino adversely affects rainfall and leads to drier conditions in India, South-east Asia and Eastern Australia, and wetter conditions in South America and the southern United States.
The production of four major rain-fed oilseeds - namely groundnut, soybean, sesame and castor - is susceptible to El Nino, as even minor variations in rainfall deviates the arability of these crops. With production likely to be impacted, oilmeal exports may also get affected.
“If rainfall this year is lower than 90 per cent of the long-range forecast, these crops would be affected adversely. However, distribution and regular spells have a greater bearing on oilseed crops than the absolute quantum of rainfall,” said Raju Choksi, vice-president, agri-commodities, Anil Nutrients Ltd.
“The demand-supply mismatch during the peak season could also bring in unwanted volatility in price of these oilseeds across major markets,” he added. Choksi added that in case of a major El Nino developing, oilseed production in India and palm oil production in Malaysia and Indonesia would take a hit.
However, wetter conditions in South America and the United States may prove beneficial to the soybean crops in these countries.
As per data available from Indian Meteorological Department, in 2004 and 2009, the country faced severe drought as monsoon was below normal by 13 per cent and 22 per cent, respectively.
During both years, oilseeds production was down, and consequently, vegetable oil imports and oilmeal exports too were affected.