After a poor harvest of soyabeans, the world's biggest edible oil importer was relying on rapeseed output to arrest the rising imports. Without any rise in rapeseed production, India will be forced to increase imports, which cost it a record USD 11.3 billion last fiscal year, from May onwards. (Agencies)
"Rapeseed production would be more or less steady around last year's level," said Praveen Khandelwal, vice president of corporate strategy at Gokul Refoils & Solvent Ltd, the biggest rapeseed processor in the country.
India produced 6.4 million tons of rapeseed - also known as mustard seed - in 2013. The area planted with rapeseed has risen to 6.97 million hectares this year from 6.5 million hectares a year ago, as farmers took advantage of monsoon-soaked land to grow the crop that is more lucrative than the usual chickpea.
Based on higher acreage, industry officials had been expecting as much as a 7.7 percent rise in production. But a sharp fall in temperatures over the past two weeks in the rapeseed growing north-western region of the country – in some places near 0 degrees Celsius - has stunted vegetative growth and in a few areas hurt flowering.
"In some areas, especially in the northern part of the state, there are reports of crop damage. It is difficult to quantify," said a senior official at the agriculture department of Rajasthan, which accounts for more than half total output.
"If the temperature remains below normal level for another two weeks as forecast by the weather department, then yield may go down," said the official.
The weather department expects extreme cold weather in the area at least for the next week and thundershowers in the next three days.
"Crop cultivated in rainfed areas and early-sown crop is likely to be affected by the cold wave and ground frost, but in other areas we can expect normal yields," said Dhiraj Singh, director at the Directorate of Rapeseed-Mustard Research.
"So far we have seen the impact of the cold wave only in small pockets," Singh said.
India's edible oil imports are steadily increasing due to rising prosperity and population growth. In the 2012/13 marketing year that ended on October 31, imports surged to 10.4 million tons, compared with 5.6 million tons just five years back.
The south Asian country fills more than half its edible oil demand through imports, consisting mainly of palm oil sourced from Indonesia and Malaysia. It also buys soyoil from Argentina and Brazil, and sunflower oil from Ukraine.
"Rapeseed output is a key in determining edible oil imports. If it fails to increase, then there is no choice but to raise imports," said Badruddin Khan, associate vice-president of research at Indiabulls Commodities.
The rapeseed futures contract for January delivery on the National Commodity and Derivatives Exchange fell more than five percent in December on expectations of a bumper output. It has rebounded three percent so far in January as the weather outlook has become more unfavourable.
After a poor harvest of soyabeans, the world's biggest edible oil importer was relying on rapeseed output to arrest the rising imports. Without any rise in rapeseed production, India will be forced to increase imports, which cost it a record USD 11.3 billion last fiscal year, from May onwards.