Total oilseed crush is forecast higher at 25 million tons, as large rapeseed carry over stocks would enhance supplies. Imports are expected to be higher at 5.01 mt from 4.81 mt because of higher demand fueled by strong economic growth and increasing population.
Import composition will largely be determined by the relative landed cost of various oils, particularly soybean oil and palm oil. The recent government notification, requiring a declaration on whether the imported agricultural or food product contains genetically engineered products and if so seeking prior approval from the governments Genetic Engineering Approval Committee for such imports could adversely impact soybean oil imports, which are mostly from genetically engineered beans.
Despite higher tariffs, palm oil and products will continue to dominate the import market because of their lower prices, logistical advantage, contractual flexibility, and blending quality with high priced domestic oils. Soy oil typically had remained as a secondary source of edible oil. It could emerge as the leading imported oil if prices are competitive, as soybean oil attracts a lower custom duty of 45% visvis palm oil due to Indias WTO commitment (provided the potential negative impact of the aforementioned policy for bioengineered products can be mitigated).
Imports of most other oils like sunflower seed oil, rapeseed oil, etc are negligible because of higher prices and or large domestic supplies.
The attache said edible oil production would increase to 6.6 mt from 6.3 mt in 2005-06, due to anticipated larger crush of higher oil content seeds like rapeseed.
Total oil meal production is forecast to rise by 5% to 13.8 mt, with most of the increase in rapeseed and cottonseed meal.
Domestic edible oil prices, in general, are expected to move in tune with international prices with Indias increasing dependence on imported oils, which now accounts for almost 50% of total consumption.
Higher consumer income is resulting in higher per capita vegetable oil consumption, estimated at around 11.2 kilograms (including minor oils like sesame seed oil, rice bran oil, safflower seed oil, etc). The attache forecasts MY 2006-07 (Oct-Sept) total oilseeds production, comprising largely rapeseed, peanut, soybeans, and cottonseed, to remain more or less unchanged at the MY 2005-06 level of 30.3 mt, assuming normal growing conditions.
A likely marginal increase in planted area under soybeans and cotton (provided the monsoon is normal) in response to prevailing higher prices, is likely to be largely offset by a possible decline in the rapeseed area due to increased competition from wheat and large overhanging stocks.
Food use of oilseeds is likely to grow with increased use of peanuts for table use and soybeans for value added products like soy milk, tofu, etc. Oilseed exports (mainly peanut) in MY 2006-07 are forecast to remain unchanged at 140,000 tonne due to stringent quality norms being enforced by the European Union (EU).
The MY 2006-07 total oil meal production is forecast to increase by 5% to 13.8 mt, with most of the increase in rapeseed and cottonseed meal. Consumption is forecast to rebound from the Avian Influenza - induced lower MY 2005-06 level, due to a likely strong recovery in the poultry sector.
MY 2006-07 exports are forecast to decline marginally from the MY 2005-06 record exports of 4.1 million tonne (mostly soybeans), due to larger domestic demand. Except soybean meal, most other meals face weak export demand due to lower protein content and poor quality.