Edible oil industry not worried over monsoon forecast

The edible oil industry is not worried about the meteorological department's first monsoon forecast on Monday as analysts said it is only marginally below normal apart from being premature.

The Met department today said the June-September southwest monsoon is likely to be "just below normal" at 93 per cent of the long-period average.

"It is too early to predict any impact on soybean output due to below normal monsoon as both the Met and other agencies do change their forecast depending upon the progress of the monsoons," said Rajesh Agarwal, chairman, the Soybean Processors Association of India.

"But even if this forecast remains true till sowing time then too it is sufficient for soybean crops," he said.

"I feel it is too early to form any opinion on impact of less than normal monsoon on soybean output as weather patterns and rainfall keep changing with every passing day," Abhiskek Malpani, an Indore-based soya trader, said.

Edible oil players said if this forecast holds true till the time the actual crop is sown, then too crops would benefit, as most kharif oilseed require less moisture.

"Moreover, it is the distribution of rainfall that eventually impacts the oilseed production and not the quantum of rains," Agarwal said, adding that the margin of plus and minus 19 per cent from the actual forecast gives ample reason to all concerned not to be unduly worried.

Devi Prasad Khandeliya, former chairman, the Solvent Extractors Association of India, said the first monsoon forecast of 2006 looks promising for the kharif oilseed crop and marginally below average rains would not impact output.

India produces around 23 million tonne of oilseeds every year, of which roughly 13-14 million tonne is produced during the kharif season (July-November).

Soybean is one of the main kharif oilseeds.

Other kharif oilseeds include groundnut, castor, and sesame. Mustard is the main oilseed that is sown in the country during the rabi season (November-March).

For 2005-06 (November-October), the industry estimates domestic soybean production at around 6.1 million tonne, up 5 per cent on year.

Prices of most edible oil and oilseeds were not affected by the monsoon forecast.

On the Indore-based National Board of Trade, May soyoil closed at Rs 415.60 per 10 kg, up Rs 3.50.

"The prices were firm due to overnight bullishness in the Chicago Board of Trade's July soyoil futures and were not affected by the monsoon forecast," Abhishek Malpani, a local trader, said.

On the National Commodity and Derivatives Exchange of India, May soybean futures closed at Rs 1,303.50 per 100 kg, up Rs 7.80.

"The first monsoon forecast had slightly bullish impact on the market mostly driven by sentimental factor rather than any fundamental reason," another local trader said.