2/12/05 ( Business Line) - WHEN the price of every other commodity is on the upswing, oilseeds have become an exception with prices weakening steadily, much to the discomfiture of growers

In the spot market, soyabean recently hit Rs 1,100 a quintal, the lowest in recent memory. Soyabean growers used to enjoying fabulous premia of 20 to 40 per cent over the minimum support price (MSP) are obviously a disappointed lot. The MSP for soyabean is Rs 1,010 a quintal for 2005-06

Currently, daily market arrivals are estimated at about four lakh bags. The trade estimate of soyabean production is 61.6 lakh tonnes , while the Government's preliminary estimate is higher at about 70 lakh tonnes

Notwithstanding satisfactory levels of purchases by processing plants, traders believe there is still some downside left to soyabean prices in the domestic market. Lack of supportive demand for soyabean extraction in the export market is a contributory factor

Rapeseed too hit: In the matter of weak oilseed prices, soyabean is not alone. Rapeseed/mustard too is currently being quoted considerably below the MSP. It is offered at less than Rs 1,500 a quintal. At the Kota mandi, mustard was ruling at a low of Rs 1,460 this week. In other words, the produce is quoted at a huge discount of Rs 2,500 a tonne on the MSP

For the forthcoming rabi harvest, MSP for rapeseed/mustard has been fixed at Rs 1,715 a quintal. None is sanguine that prices would improve from the current levels to come anywhere close to the MSP. The National Agricultural Cooperative Marketing Federation of India (Nafed) is holding around 15 lakh tonnes of the produce procured earlier this year

This is weighing heavily on the market sentiment. The industry and trade is unsure about when and how the stock would be disposed of. With the passage of every day, the cost of the produce in the hands of Nafed keeps rising

There would obviously be a huge burden on the Government in the form of losses arising out of procurement and storage of rapeseed/mustard

Bio-diesel issue hyped: The behaviour of the vegetable oil market - both international and domestic - in the last two months has rubbished the bullish forecasts made by experts. On current reckoning, the bio-diesel issue seems to have been hyped beyond reasonable limits

Despite talks of huge bio-diesel demand, Malaysian crude palm oil is under pressure with prices breaching the psychological mark of 1,400 ringgit (Rs 17,051) a tonne. Soyabean oil at the Chicago exchange is trading at a low 21-22 cents a pound, with no immediate prospect of a sharp recovery

Huge transesterification capacities being built around the world for biodiesel production may help divert some more vegetable oil in the coming months. Soyabean crop prospects in South America on current reckoning appear satisfactory. There are no hiccups in the winter oilseeds plantings in India.

(1 million = 10 lakh)