NEW DELHI (Dow Jones)--Despite concerns about a possible drought thisyear, damage to India's oilseed crop may be limited as monsoon rains haverevived in oilseed growing regions, a senior industry official told DowJones Newswires."The last few days have put the smile back on the faces of oilseedfarmers, as rains in Maharashtra and Gujarat may prevent a furtherreduction in crop size," said B.V. Mehta, executive director of SolventExtractors' Association of India, a lobby group of oil mills.India's summer sown oilseed crop, sown in June and July and harvestedin September, depends entirely on the June-September monsoon rains forsustenance. Groundnut and soybean are the two main oilseeds sown insummer.Monsoon rains started in the last week of May this year, ahead of theusual June 1 start date for India, but the rains tapered off in earlyJuly, leading to concerns of a drought in many parts of the country andlower farm output. Both the groundnut and soybean crops were affected byscanty rains in the first 20 days of July.Farmers who planted oilseed crops in early June watched helplessly astheir crops dried up, while those who were planning to sow later, couldn'tdo so for most of July.Monsoon rains have, however, revived in the oilseeds growing areas ofwestern and central India for the past three to four days and weatherdepartment officials have said the rains will continue for another threeto four days.

CROP SIZE TO BE LOWER THAN 25 Mln MT

Mehta, however, said the condition of oilseed crop still can't bedescribed as satisfactory. However, "the rains have made the cropcondition less worse than what it was a week ago," he said.Mehta said he was certain that India's oilseed crop this year will besmaller than that of 2003. "Last year's production was a record 25 millionmetric tons. That can't be achieved this year as yield is likely to fallbecause of the prolonged dry spell in July."It is still too early to predict the final crop this year or thedegree of the expected decline, he said.In the case of soybeans for example, Mehta said rains in MadhyaPradesh and Vidarbha have given "a fresh lease of life" to the crop."The overall crop size of soybeans may be lower than the bumper 2003harvest, but there is no doubt the condition of the crop has improvedoverall from last week," said Mehta.He said yield and production of groundnut too may be lower this yearcompared with 2003, as rains eluded the key producing province, Gujaratfor more than 20 days this month.Some industry officials have estimated India's groundnut crop willfall to 3.5 million tons this year from 5 million tons last year.

RISE IN EDIBLE OIL IMPORTS LIKELY

Mehta said India's edible oil imports may rise to around 5 milliontons in the next oil marketing year beginning Nov. 1, 2004, compared withan estimated 4 million-4.5 million tons that will be imported in thecurrent marketing year.India used to import around 5 million tons of edible oils each year,but a bumper crop last season has reduced the need for imports this year.The country imports palm oil from Indonesia and Malaysia, while itssoyoil mostly comes from South America.Mehta said after a sharp rise in edible oil prices over the past fewweeks, the market may stabilize with renewed rains in key oilseed growingregions. "Market sentiment is certainly turning positive because of goodmonsoon rains in the last few days."