In India, the soon-to-be announced hike in import duty may give the legup to the sluggish vegoil prices, as the oilseeds crop this season has been lower than expected earlier. Latest figures are expected to be announced at the Chennai's seminar on oilseeds and the vegoils. Given the shortage of oilseeds crop here, the government may be reluctant to announce duty hike in excess of 10 per cent, traders feel.

The firming up of vegoil prices in the coming weeks may partially put a dent in surging imports of cheap palmoil, and possibly pacify the ruffled tempers of the coconut growers in the southern region.

New buyers are fiercely hunted by the world's two aggressive vegoil lobbies - the soyabean growers of the USA, and the palm growers and oil producers of Malaysia and Indonesia. Not wanting to depend on its largest customer India (imports over 4.5 million tonnes of vegoil annually, of which more than 50 per cent is palmoil) both the palmoil producers are farming out new buyers for their country's lifeline - palmoil. Traders say, the new buyers include Japan and Taiwan in the East, European nations, Russia, Ukraine and couple of CIS countries in the Western markets.The impact of this can be felt in the Indian vegoil complex. The adjoining chart indicates that while the cheap palmoil has remained range bound throughout the year, both groundnut oil and coconut oil have been humbled by the surging imports of cheap palmoil. The trend is expected to turnaround.

Bombay Oilseeds and Oils Exchange (BOOE) director Kushal Thaker feels "certain natural factors are contributing to the bottoming out of the domestic vegoil sector".

Among others, the rapeseed, sunseed and linseed have registered low produce this year due to detrimental weather conditions in west Europe. The production could be collectively down by nearly 25 per cent from its comparison with last year. Europe's rapeseed crop is seen at 9 mn tn, down from 12 mn tn last year, sunflowerseed crop would be at 5 mn tn from 7.5 mn tn last year. The world's rapeseed crop would be around 38 mn tn against 41 mn tn earlier year.

Also, the world production of sunflowerseeds is expected to be 26 mn tn against 29.5 mn tn the previous year. The latest report of USDA states of a production of 76 mn tn of soybeans that is lower by 4 mn tn which was predicted before the harvest. By October end, 95 per cent of the harvest in USA was complete. Extensive dryness in the climate and unruly rains during the harvest period affected the crop yields.

The oilseeds crop in India too is lower than expected earlier because of the "worst ever monsoon in 2000". While the soyabean crop is placed at just around five million tonnes, that of groundnut and cottonseed crop are said to be at 48 lk tn and 51 lk tn respectively.

Reports from the groundnut and cottonseed producing regions of Gujarat indicate a major problem next year as the soil has lost its nutrients and moisture from it due to deficient third phase of rains.

Lastly, trading in futures of oilseeds and oils is reflecting these developments. On the BOOE, for example, despite the uncertainty of import duty hike, the December delivery contract for RBD palmolein has been firmly steady at round Rs 213 levels, up from Rs 196 few weeks ago.

On the Commex Malaysia too trading has been a bit bullish as the December delivery contracts are seen up to around RM840 per tonne levels from RM733 levels earlier.

The Rotterdam quotes for December 2000 and January 2001 shipments for soyabean and soyaoil too are up at $225 per tonne and $335 per tonne respectively, up from $200 and $310 respectively for October deliveries.

USA's record soy crop
The United States' Department of Agriculture (USDA) has indicated that US farmers will harvest around 10.053 billion bushels of corn and soybean crops this season - a record, but lower than its October estimates of 10.192 billion bushels.USDA trimmed its forecast of US soyabean production by two per cent to 2.78 billion bushels, still high to beat the record set in 1998 of 2.74 billion bushels.