A recent commodity report focusing on edible oil and soy production suggests that India's vegetable oil industry is not happy, while global oilseed production could reach new heights.
Indian vegetable oil market
The American Soybean Association (ASA) says that India's vegetable oil purchases are widely expected to dip this season, though the country's edible oil production is projected to rise.
The projection comes after India's vegetable oils industry voiced disappointment over the government's decision to cut import tariff values by just $3 to $24 a tonne, according to (ASA).
Tariff values are prices set by the finance ministry in order to calculate customs duties and prevent under invoicing of edible oil imports.
Although Indian authorities said there would be no revision of the tariff, pressure from the edible oil industry for the rates to be brought into line with market prices led to the revision. However, the Central Organisation for Oil Industry and Trade believes that the cut is too small a reduction and will have no effect on domestic prices.
Global oilseed production
Global oilseed production for 2005-06 however is projected at a record 389 million tonnes with non-US production likely to reach 292.5 million tonnes.
Total US oilseed production for 2005-06 is estimated at 96.4 million tonnes, up 0.5 million tonnes from last year. Although soybean production accounts for most of the increase, sunflower seed, canola, cottonseed, and peanut production could also contribute to the boost in oilseed production.
US soybean production
The ASA report also focuses on US soybean production. It says that the USDA has boosted the 2005-06 soybean production estimate to 84 million tones, and that exports could reach 25.9 million tones.
Soybean stocks are projected at 13.7 million tonnes.
However, experts have warned producers to be vigilant in preparing to fight the spread of Asian soybean rust. The US industry has been badly affected by disease, and last year, ASA president Neal Bredehoeft even called for the USDA to ensure there was enough fungicide available to tackle the threat.
The USDA's Economic Research Service also warned last year that if an outbreak of soy rust did occur, the country's economy could lose between $240 million and $2 billion annually, depending on the severity of the crisis. The United States currently supplies about 40 per cent of the world's soybean trade.
Brazilian soybean production
Finally, Brazil's 2005-06 soybean production could reach 57.4 million tonnes, according to the latest estimate from the Brazilian Vegetable Oils Industry Association (Abiove). Abiove's soybean export estimate for the 2006-07 is 24.5 million tonnes.
Local demand for soymeal is projected to continue to rise, due in part to demand from Brazil's large livestock industry. However, soyoil demand remains volatile. Abiove estimates that Brazil's soy industry will profit only slightly better in 2006 because of rising international prices.