Higher production of oil seeds is good news for the country as imports tend to rise when domestic production declines. Soybean arrivals are also on the lower side this season putting more pressure on the oilseed market.
The country had to import edible oil worth $ 11.3 billion in the last oil year. India is the world's biggest buyer of vegetable oil, importing nearly 60 % of its 16-17 million tonne annual consumption. Import of edible oil has nearly doubled in six years due to stagnant oilseed production and rising demand.
Mustard seed acreage has increased to 70.35 lakh hectare (lh) as of 9th Jan 2014 against the normal coverage of 61 lh. Area could rise till 71.5 lh in Rabi 2014. Production for the 2013-14 is expected to be 76.50 lakh tonne compared to 71.50 in 2012-13, an increase of 7%. This could potentially head for a record of 82.25 lakh tonne if yields improve, Fayaz Hudani of Kotak commodities said. He feels the winter has had minimal impact on the crop. For the current season we expect a yield of 1,070 kg per ha compared to 1,058 kg per ha in 2013-14, an increase of 1.14%. Stock to usage ratio is at 10% compared to 6% in last season, he added.
Cold wave conditions in some parts of Rajasthan, the top mustard seed producing state in India, had caused concerns of crop damage. Traders and experts are divided over the impact with some saying that there would be hardly any fall in production. Spot price of mustard seed on Wednesday evening stood at Rs 3,455.5 per quintal at the NCDEX counter. Kotak reports that mustard seed are estimated to correct till Rs 3,200-3,100 per quintal with upside being Rs 3,650-3,700. Indians consume around 14 kilograms a year of edible oils compared with a global average of 24 kilograms. Edible oil consumption is rising by 5.6% annually, while production has grown at a much slower pace, 1.8% on average. In the 2012-13 oil year, imports of edible oil surged to 10.38 million tonne as against 9.98 million tonne in the previous year.