25/09/05 Mumbai (Business Line) - WITH bio-diesel fuelling demand,vegetable oil prices are seen heading higher during the next 12 months,according to trade experts.

The experts, who came up with their view on various aspects of vegoiltrade at Globoil India, also projected the country to import over 50 lakhtonnes of edible oil starting November with most of them pegging it around55 lakh tonnes. A couple of players feel the imports could be less ataround 45 lakh tonnes since the country holds 20 lakh tonnes of mustardstocks.

According to Mr Dorab Mistry, Director, Godrej International Ltd, crudepalm futures in Malaysia could rule between 1,400 and 1,500 Malaysianringgit a tonne, with the prices creeping towards the top-end aroundFebruary.

"This will put RBD olein in the $400-450 a tonne range from the current$370-420 range f.o.b, while crude de-gummed soyabean oil could rule at$460-500 f.o.b," he said in his outlook for world edible oil price.

The price could also be aided by the six million tonnes increase in globaldemand against 5.3 million tonnes rise in production. Though drought inBrazil cut production, higher palm production from August 2004 to July2005 has helped ease the situation.

"However, the production pattern between October and November should beinteresting since the trees need rest and recuperation. If that happens,then palm oil will rise only marginally," Mr Mistry said.

Area under soyabean in Brazil could either stagnate or decline during2005-06, but the yield could be higher. A larger canola crop and highrapeseed prices in Europe currently will help get an additional onemillion tonnes of rapeoil next season. Production of coconut oil, on theother hand, could decline.

"If crude palm oil prices trade consistently at 1,500 or 1,600 ringgits,plantations will experience unparalleled prosperity and acreage under thecrop will expand," he said.

Again, if energy prices continue to rule high at the current level, thenadditional acres need to be found for the annual six million tonnes risein demand. "But let the bulls not get carried away, we must neverunderestimate human resourcefulness and ingenuity," he said.

On the Indian scenario, Mr Mistry said imports this season were 10 lakhtonnes higher than initial projections of 48 lakh tonnes. Next season'simport could be the same as this season, he said.

Stating that Indian prices no more dictated global prices, he saiddomestic prices would rise only if the rates increased in theinternational market.

Dwelling on bio-diesel demand, Mr Mistry said taking into credit theupcoming capacity of bio-diesel demand, there may be additional demand for1.6 million tonnes of soyabean oil. This, in theory, he said, could wipeout the entire carryover stocks of the US, which currently is 7.25 lakhtonnes. Tax exemptions and installation of new capacity in Mid-West of UScould make production of bio-diesel from soya oil attractive. This, inturn, could lead to sharp hike in soya oil prices, he said.

Earlier at the price outlook session, experts said edible oil prices couldrise in the next three months after witnessing an initial dip. Accordingto them, soyabean oil could rise to $530-545 a tonne f.o.b in the nextthree months, while that of palm oil could range between 1,430 and 1,500ringgits.

However, the experts said the market would have to consider an overboughtsituation in India and Pakistan. But the oncoming festivals of Diwali andRamzan could see a rise in consumption besides a fall in production. Allthese could keep the prices steady.

According to the experts, current rains in Madhya Pradesh and Rajasthancould help the rabi oilseeds crop but much would depend on the moisturecontent.

Domestic prices, according to them, are expected to dip in the short-termand may gain towards November.