Oilseeds crop to fall short in 2005

The global outlook for oil and oilseed production is bearish in the next year following an expected lower crop in the largest producing countries, Brazil and Argentina, coupled with depleting oil stocks and higher inventory cost.

In the case of soyabean, 59 per cent of the production comes from the US, Brazil and Argentina.

"The US has had a crop better than expected at roughly 78.1 million tonne. However, the productivity costs are on a rapid rise in South America. Also, the soya crop in Argentina and Brazil is affected by the Asian rust fungus, that would considerably bring down the crop size in this region," said Thomas Mielke, director, Ista Mielke GmbH, and editor in chief of its publication Oilworld from Hamburg, Germany.

Speaking at the Globoil 2004 conference, he added that while the soyabean crop was excellent in India last year at 64 lakh tonne, compared with 40 lakh tonne the previous year it was poor in Europe and China. This year, the production is not expected to rise substantially because of the delayed monsoon.

This according to Mielke, is likely to exert additional pressure on the global pricing as the yield in the US this year though above expectation, is below the average trend. While the demand is expected to rise substantially, the consumers must rely on further production.

On the world stocks, he said that most countries the oil stocks are depleting to cut the inventory costs and in India as well the import of soyabean oil in June and July though high, were not commensurate to the demand.

Mielke reasoned, "The rising demand in contrast to the supply situation would have an effect on the prices. Soyabean oil, sunflower oil and groundnut oil would end at higher levels."

Also, with the world demand growth likely to be higher, the meal demand in Europe this year is very high. The demand is increasing in China, India and Pakistan as well. However, in contrast the crushing has declined globally.

In this scenario, Mielke pointed out that it India's main challenge, is to raise the yield considerably and reduce dependence on imports.