Oilseeds, oil prises may increase in 2012-13: IMaCS

Mumbai: Domestic oilseeds and oil prices may go up in 2012-13 due to expected decline in production, likely rise in global prices and higher import costs, according to a recent report by IMaCS, a subsidiary of ICRA.

"Domestic oilseeds and oil prices are expected to increase during 2012-13 for a raft of reasons like expected decline in domestic oilseeds production, depletion in stocks, expected increase in world prices, and higher import costs," the report said.

The production of edible oils in the country is dependent on the production and availability of oilseeds, either domestic or imported, it said, adding India's oilseeds output is forecast to decline 3-4 per cent in 2012-13 due to expected decline in kharif (summer) oilseeds output.

Oilseeds acreage under kharif 2012-13 has declined 3.3 per cent because of deficient monsoons. Along with lower yields, this is likely to result in a 10 per cent decline in kharif oilseeds production with significant declines expected for groundnut, it said.

Further, the fluctuating domestic production of oilseeds has a direct impact on the edible oil sector, with imports and prices rising during low domestic production. Domestic vegetable oil production is forecast to decline 3 per cent in 2012-13 with significant declines expected for groundnut oil, it said.

In addition, rainfall conditions during the rabi (winter) 2012-13, season will have a significant impact on rapeseed oil production. India's edible oil consumption is estimated at around 16.7-17 million tonne in 2012-13.

"Although consumption has grown uninterrupted over the past few decades, growth has varied based on availability and prices. With its large population and continued strong economic growth, India is may register consumption growth of 4 per cent per annum in the medium term," the report said.

Over the medium-term, domestic consumption growth is expected to be higher than production, resulting in continued increase in the volume of imports. Overall, India's edible oil imports are forecast to increase 7-8 per cent during 2012-13 to about 10.2-10.4 million tonne because of expected decline in oilseeds and vegetable oils production. (More) PTI SM NP YB ns YB

For 2012-13, tightening of the global vegetable oil supply and demand situation is anticipated. Production growth is forecast to plunge from 4.2 per cent in 2011-12 to 0.2 per cent in 2012-13 due to stagnation in soyabean oil production, and declines in production of rapeseed oil, sunflower oil, coconut oil and cottonseed oil. Poor growth in global supplies is forecast to coincide with a steady expansion in global demand.

The market will be faced with a strong depletion of inventories and lower stock-to-use ratios, especially for soyabean, rapeseed, and sunflower seed. Such forecasts suggest that international prices for oils and fats could increase in the course of 2012-13.