Global oilseed prices have started to recover from 1999-00 based on switching of farmers to grains or other crops at the expense of the oilseeds. This recovery is likely to be stretched to 2000-01, subject to weather conditions, production and demand factors. Information as of May 2000 suggest a decline in harvested area of 10 major oilseeds by 1.1 million hectares in 2000-01. This is a clear-cut diversion from the trend in the previous five years - when there was an average annual growth of four million hectares worldwide.In the season 1999-00, large inventory of sunflower and rapeseed will be more than adequate to par the decline in soyabean production in the same period. Also the world imports of rapeseed and canola (Canadian variant of rapeseed) are set to increase to 9.1 million tonnes (mt) in July/June 1999-00 as compared to 6.7 mt in the previous season. As in the preceding years, China is the dominant destination, followed by Mexico, South Asian countries and Japan. Apart from EU, the east European countries and Australia have also geared up to meet the surging world import demand.
Canadian canola was however unable to benefit from the world import demand mainly due to the uncompetitive export prices and logistical bottlenecks. Rapeseed production outlook for 2000-01 is not encouraging based on sizeable cutbacks in planting in east and west Europe as well as in Canada and Australia. Due to unfavorable weather conditions it is unlikely that previous year's yields in Canada, Germany and France can be achieved this time. For this season, the world production of rapeseed and canola would be down sharply by 2.75 mt at a projected 39.4 mt in 2000-01.
Record carry over stocks is expected to bridge the shortfall in production but total supplies will be still declining by an estimated 1.1 mt. European rapeseed stock is likely to be under pressure resulting in a dip in exports and rapeseed crushing. On the other hand, the Canadian canola output and export are going to be boosted on reduced export availabilities of the EU's 15 countries, as well as east Europe and Australia. With a carry over of 2.2 mt, Canadian canola should be able to capture more global market despite a lower crop in the new season.
Canola carry over may dip to 1.1 mt at the end of this season. But in the course, Chinese import demand is going to play a crucial role in the coming days. If world rapeseed demand matches with estimate, there is going to be a significant decline in Canadian and world stocks of rapeseed and canola. This should be a bullish factor in the rapeseed prices in the global scenario in medium term.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.