30/12/2011 (Bloomberg) - Rapeseed production in India, the world’s second-largest importer of cooking oils, may decline this year as winter rains elude the nation’s biggest growing region, hampering crop sowing, a processors’ group said.

Output may drop as much as 21 percent to 5.5 million metric tons in the crop year that started Oct. 1, from 7 million tons a year earlier, Vijay Data, vice president of the Solvent Extractors’ Association of India, said by phone from Jaipur. Lower production and rising domestic demand may boost vegetable oil imports to more than 9 million tons this year from 8.67 a year earlier, he said.

An increase in Indian purchases may help pare losses in Malaysian palm oil prices, heading for the first annual decline since 2008 on higher global production and concern that demand may be curbed by the European debt crisis. The South Asian nation meets almost 50 percent of its edible oil demand through imports and is the largest palm oil buyer from Indonesia and Malaysia, the top producers.

“Lower production expectations and cold weather conditions in the growing areas will boost prices,” Vimala Reddy, an analyst at Karvy Comtrade Ltd., said by phone from the Indian city of Hyderabad. “We may see a decline of 5-10 percent in India’s vegetable oil production.”

Rapeseed for delivery in January on the National Commodity & Derivatives Exchange Ltd. jumped as much as 2.9 percent to 3,645 rupees ($68) per 100 kilograms, the highest level this year, and traded at 3,589 rupees at 1:26 p.m. in Mumbai.

Prices may jump by 6 percent in two months before harvesting picks up pace, Reddy said.

Lower Area

Rapeseed was sown in 6.38 million hectares (15.8 million acres) as of Dec. 23, compared with 6.78 million hectares a year earlier, the farm ministry said last week.

Overall planted area under rapeseed is 4 to 5 percent less than a year ago “as we didn’t receive rains in the last quarter of this year,” Data said. “So late sowing was not possible” in Rajasthan state, the biggest grower, he said.

Rapeseed, usually planted from October to November and harvested from February to March, accounts for more than 70 percent of the nation’s output of winter-sown oilseeds. Its yellow-colored oil is the third-most used cooking oil in India after palm oil and soybean oil.

Exports of rapeseed meal from India may be less than 1 million tons this year,compared with 1.2 million tons a year earlier, Data said.

Costly Dollar

“The dollar is costlier so we are getting better prices for meal exports, but if you do not have enough stocks you cannot export,” he said. “Consumption in India is also growing.”

India’s rupee is Asia’s worst performer this year, losing 16 percent and reaching a record low of 54.305 a dollar on Dec. 15 on concerns Europe’s debt crisis will slow the global economy and damp demand for emerging-market assets.

Overseas purchases of palm oil and soybean oil may be unaffected by the plunge in the rupee as demand remains robust and stockpiles low, Data said.

“Imports will certainly be over 9 million tons due to less production,” Data said referring to India’s overall vegetable oil purchases. “There may be some shrinkage in oil consumption as the cost of all imported oils have gone up by 20-25 percent.”