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Vegoil seen up on tight global supplies

Our Bureau

MUMBAI, Aug. 29

ERRATIC weather conditions in July, significant reduction in world oilseed production, particularly the high oil content oilseeds, and weak growth in palm oil production are all expected to combine to keep the global vegetable oil market in 2002-03 rather buoyant.

World vegetable oil consumption for 2002-03 is forecast to show a modest increase of 1.5 per cent over the current year.

However, due to moderate growth in supply following some setback to crop prospects in different parts of the world, even a slowdown in demand growth will be unable to prevent a significant increase in prices.

The net decrease in production of high oil content oilseeds coupled with below-trend growth in palm oil production has led to a tightening of the availability of edible oils.

World oilseed production in 2002-03 is expected to reach 319.9 million tonnes (mt), 3.5 mt lower than in 2001-02, and 8.6 mt lower than estimated in July, according to the US Department of Agriculture (USDA).

If realised, it will be the first year-to-year decline in seven years. Much of the decrease is the result of lower US oilseed production.

US soyabean output is forecast to decline to 71.5 mt in 2002-03, down 9 per cent from last year due to weather related yield losses, USDA pointed out.

Dry weather is also expected to reduce yields of rapeseed in Canada and Australia.

India's output of soyabean, groundnut and cottonseed is expected to decline as the south-west monsoon has not provided sufficient rain in oilseed growing areas.

The decline in high oil bearing oilseeds and the weak growth of palm oil production is expected to lead to an even tighter oil market next year, USDA predicted, adding that India and China will increase oil imports by 660,000 tonnes and 625,000 tonnes respectively.

Vegetable oil stocks are expected to decline to 6.6 mt, down 10 per cent from last year. This will be lowest level since 1997-98.

World oilseed trade is forecast by USDA to reach 73.1 mt in 2002-03, a 4 per cent increase over previous year.

The growth in soyabean export, up nearly 7 per cent and sunflowerseed exports, 5 per cent higher than last year, more than offset declines in virtually every other oilseed.

While US soyabean exports are expected to fall 6.5 mt, South America will increase exports, led by Brazil, Argentina and Paraguay, up 6 mt, 3.6 mt and 0.6 mt respectively, the agency predicted. As expected China will be the largest import market for soyabean at 14 mt.

World ending stocks of soyabean are expected to drop 24 per cent to 22.9 mt in 2002-03 as consumption exceeds production. The ending stocks of all the oilseeds (except palm kernel) are expected to drop by a combined 7.8 mt, which represents a significant 23 per cent decline worldwide.

Led by a 1.4 mt increase in soyabean meal, oilmeal trade is expected to grow at a modest 2.2 per cent. Because of greater available supplies, Brazil and Argentina are expected increase exports of soyabean meal by 16 and 9 per cent respectively, while exports from the US are forecast to decline by 12 per cent to 6.1 mt in response to tighter soyabean supplies and increased competition.

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