25/08/2009 (Bloomberg), New Delhi - India, the world’s biggest buyer of palm oil after China, may produce fewer monsoon-sown oilseeds as dry weather in the main growing areas reduced sowing of peanuts.

Output may be 12 to 15 percent less than the 15.07 million tons produced in the monsoon crop last year, Govindlal G. Patel, director of Dipak Enterprises, said in an interview today. Patel, 70, has been trading oilseeds for more than four decades.

India will import items such as edible oil to meet shortage caused by drought in 40 percent of the country’s 626 districts, Finance Minister Pranab Mukherjee said Aug. 21. Higher purchases may support palm oil, which has fallen 14 percent from a nine- month high in May. The commodity makes up 90 percent of India’s edible oil bought overseas.

“Imports are going to rise next year as the monsoon crop is not looking hunky dory,” Atul Chaturvedi, chief executive of Adani Wilmar Ltd., said from Ahemdabad in Gujarat state, India’s biggest grower of peanuts. “Groundnut (peanut) and sunflower crops are likely to decline.”

November-delivery palm oil advanced 1.3 percent to 2,375 ringgit ($676) a ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Earlier, it gained as much as 2.4 percent.

The monsoon, which brings about three-quarters of India’s annual rainfall, may be the driest in seven years this season, the weather bureau has said. Falls in parts of Andhra Pradesh, the No.2 peanut grower, have been as much as 59 percent less than normal, while the main soybean-growing regions in central parts of the country need another bout of rains.

Acreage shrinks

Oilseeds were planted on 15.25 million hectares as of Aug. 12, down from 16.4 million hectares at the same time last year, the farm ministry said Aug. 13. Farmers may pare area by as much as 1.8 million hectares from 18.44 million hectares sown for the monsoon crop last year, because of inadequate rains, Patel said.

“There is loss in peanut and that loss we can’t recoup,” said Davish Jain, president of the Central Organization for Oil Industry and Trade, the nation’s biggest group of processors, by phone from central city of Indore. “Soybeans need more rains as the crop is entering the crucial flowering stage. If it doesn’t rain now, soil moisture will evaporate.”

The monsoon crop, which provides more than 60 percent of the oilseeds, is sown in June and harvested in mid-September.

Cooking oil imports may total 8.4 million tons in the year starting November, 5 percent more than estimated for this year, Patel said in July. Peanut oil accounts for 5 percent of total cooking oil consumption.

Crude palm oil purchases in the nine months ended July 31 gained by a third to 3.83 million tons, the Solvent Extractors’ Association of India said Aug. 13. Soybean oil imports rose 73 percent to 726,716 tons, the Mumbai-based group said.

Rising stockpiles may keep a lid on prices, Jain said.

“Some inventory has been built up in the form of either oilseeds or imported oil which won’t let domestic prices to go up,” he said. “I don’t see any spurt in prices.”