India Monsoon Oilseeds Output May Decline, Supporting Palm Oil

July 23 (Bloomberg) -- India, the world’s largest vegetable oil buyer after China, may produce fewer oilseeds as dry weather in the biggest growing areas reduced monsoon sowing of peanuts, soybeans and sesame seeds.

Production may be less than the 15.07 million metric tons estimated by the industry’s largest trade group for the monsoon crop last year, Govindlal G. Patel, director of Dipak Enterprises, said in an interview yesterday. Patel, 70, has been trading oilseeds for more than four decades.

India’s cooking oil imports may be 8.4 million tons in the year starting November, 5 percent more than estimated for this year, Patel said. Higher purchases by the South Asian nation may help arrest a slide in the price of palm oil, which has declined 24 percent since reaching a nine-month high in May. The tropical oil accounts for 90 percent of India’s edible oil bought abroad.

Oilseeds were planted on 10.7 million hectares (26.4 million acres) as of July 16, down from 11.03 million hectares at the same time last year, the agriculture ministry said last week. Farmers may pare area by as much as 800,000 hectares from 18.44 million hectares sown for the monsoon crop last year, because of inadequate rains, Patel said.

Showers have been below average so far in Gujarat, Andhra Pradesh and Tamil Nadu, the nation’s biggest growers of peanuts, and in Madhya Pradesh, Maharashtra and Rajasthan, India’s three biggest growers of soybeans, according to the India Meteorological Department.

“Everything depends on rains in August and September,” said Davish Jain, president of the Central Organization for Oil Industry and Trade, India’s biggest group of processors.

Monsoon Crop

The monsoon crop, which provides more than 60 percent of the oilseeds, is sown in June and harvested in mid-September.

October-delivery palm oil gained 1.9 percent to 2,122 ringgit ($599) a ton on the Malaysia Derivatives Exchange at 11:48 a.m. in Kuala Lumpur. The contract yesterday dropped 2.8 percent, the largest decline in four days.

India’s imports of crude palm oil jumped 66 percent to 3.49 million tons in the eight months ended June, while purchases of soybean oil climbed 86 percent to 660,504 tons, the Mumbai-based Solvent Extractors’ Association of India said July 14.

The country relies on imports to meet half its cooking oil demand. It buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.

The June-September monsoon rains, which account for four- fifths of the nation’s annual rainfall, were 27 less than normal from June 1 to July 15, with showers being deficient in 22 of 36 weather divisions, the weather office said last week.

Peanuts were sown on 2.57 million hectares as of July 16, down from 2.76 million hectares, the farm ministry said July 17. Soybeans have been planted to 7.14 million hectares, compared with 7.24 million hectares a year earlier, the ministry said.