25/09/2009 (Bloomberg) - India, the biggest buyer of palm oil after China, may producer fewer monsoon-sown oilseeds as dry weather in the main growing areas reduced sowing of peanuts.

Output may be 13.1 million tons, compared with 13.7 million tons produced in the monsoon crop last year, Govindlal G. Patel, director of Dipak Enterprises, told an industry conference today in Mumbai. Patel, 70, has been trading oilseeds for more than four decades.

India will import food items including edible oils to meet shortages caused by drought in almost half the country, Finance Minister Pranab Mukherjee said last month. Higher purchases may help support palm oil, which has fallen 25 percent from a nine- month high in May. The commodity accounts for 90 percent of the country’s edible oil bought overseas.

“The monsoon was very erratic and highly unsatisfactory,” Patel said. “As the onset of monsoon was late by around two to three weeks, the arrival of crops may also be delayed.”

The monsoon, the main source of irrigation for the nation’s 235 million farmers, is the weakest in seven years this season, according to the weather bureau. Showers in some parts of Andhra Pradesh, India’s second-biggest grower of peanuts, have been as much as 59 percent below normal, and in Gujarat state, the No.1 grower of the oilseed, uneven rain caused the area to shrink.

Oilseeds were sown to 16.4 million hectares, 7 percent less than a year ago, Patel said. That may cause total production to drop by as much as 1.5 million tons, Ashok Sethia, president of the Solvent Extractors’ Association of India, said this week.

Peanut Output

Monsoon peanut output may drop 24 percent to 3.2 million tons this year, while oil extracted from the oilseed may slump 58 percent to 175,000 tons, Patel said. Soybean production may rise to 9 million tons from 8.5 million tons, he said.

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

Edible oils available from crushing monsoon-sown crop may be 3.7 million tons, compared with 3.8 million tons as soybean oil output increases by 170,000 tons, Patel said.

India may import record volumes for a second year, Sethia said Sept. 22. Purchases in the year starting Nov. 1 may total as much as 8.5 million tons, he said. Imports in the 10 months ended August jumped 49 percent to 7.07 million tons.

The country relies on imports to meet half its cooking oil needs and buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.