The year ahead is also likely to witnessgood supplies of both oilseeds and edible oil. The overall domestic oilseed crop situation is said to be comfortable. Soyabean crop, for example, is placed at 62 lakh tonnes, a record high and that of groundnut at 36 lakh tonne. With good monsoon, oilseed production in 1998-99 kharif season will be around 130 lakh tonnes. Heavy imports and increasing supply of domestic edible oils is likely to result in a supply glut during 1999 resulting in price-crash by mid-1999. But this would depend on the overall government policy which currently allows imports of edible oils under OGL.

Trading in excess during 1998 may result in panic offloading and price undercutting by importers. The net result of this may be seen by March 1999.After Malaysian dumping of palm oil in 1998, it's the turn of Brazil which is now dumping its soya oil, at much cheaper rates compared to Malaysia's palm oil. This could result in the reduction of palm oil's share in the country's total edible oils basket.

Dumping of cheaper soft oilsfrom Malaysia and Latin American countries will hasten the edible oil price fall in 1999. The landed cost of some of the soft oils are as low as Rs 290-320 per 10 kg. Soya degum or imported rapeseed degum price may go below Rs 300 by the end of March 1999. This will put pressure on other oils like palmolein, groundnut oil and sunflower oil.A forecast made by US Department of Agriculture says India's total edible oil imports in 1999 would be more than 20 lakh tonnes. China would continue to be the world's largest importer of vegetable oils.

In 1998, overall oilseeds production remained stagnant because of poor planing, inadequate resources and lack of thrust by the government. Methods of increase in oilseeds productivity still eludes policy-makers despite the ongoing technology mission of oilseeds and the non-effective functioning of the National Dairy Development Board (NDDB) which promised support to the state and central governments in dousing the flared edible oil prices.All these factors contributed tothe widening of the demand-supply gap. This issue therefore, requires concerted policy measures, rather than ad hoc measures like reduction of import duty, palm cultivation and like.With improved oilseeds crop in 1998-99, prices in the parallel futures market have begun declining. At Indore parallel soya future are quoted at Rs 345, the Ganganagar cotton wash oil future quoted at Rs 342.

In spot market also price have remained weak. Indore soya refined fell to Rs 335 per 10 kg, Akola cotton wash fell to Rs 335, and Punjab cotton wash fell to Rs 349 a kg.