Sugar Productions Sufficient to Meet Requirement

India's domestic sugar production in the current sugar season 2012-13 is estimated to be sufficient to meet the estimated domestic consumption requirement, according to a latest press release from the Ministry of Consumer Affairs. As such, large surplus production of sugar in this season is not expected at present. Changes in export policy would be made, if considered appropriate depending upon the production, availability and international as well as domestic prices of sugar.  As regards revision of import duty, no decision has been taken by the Government so far.  The production, demand, import and export of sugar during each of last three sugar seasons and the estimated figures for 2012-13 are as under;

As per the data published by Directorate General of Commercial Intelligence and Statistics, Kolkata export of sugar from India during last three sugar seasons have been mainly to Bangladesh, Sri Lanka, Dijibouti, Indonesia, Malaysia, Pakistan, Somalia & UAE etc and import of sugar in India was mainly from Brazil, Thailand, Myanmar, South Africa, Argentina and UAE etc. There had been hardly any export/import of sugar during current sugar season 2012-13 so far. No incentive/assistance was provided to the exporters during the said period.

Veg oil imports cross 10 million tonne-mark in 2011-12

India's vegetable oil imports surged by 17 per cent crossing 10 million tonnes mark in the 2011-12 marketing year that ended last month on strong domestic demand as per industry body Solvent Extractors Association of India (SEA).The country had imported a total of 8.7 million tonnes of vegetable oil comprising both edible and non-edible oils in the 2010-11 marketing year (November-October). The total import of edible oil during November 2011 to October 2012 is reported at 99.81 lakh tonnes, doubled in six years.

According to Solvent Extractors Association of India (SEA), "Local consumption increased by up to 8,00,000 tonnes due to a rise in per capita consumption and population growth. Lower price of vegetable oils also boosted consumption during the year." 

The overall import of vegetableoil has increased by 15.2 lakh tonnes (17.5%) during oil year 2011-12(Nov.-Oct) over the previous year. The main reasons for increase in import of vegetable oil are:
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i) The overall production of veg. oils was down by about 7.0 lakh tonnes due to reduced oilseed crop during 2011-12,

ii) Local consumption increased by about 7.5 to 8.0 lakh tonnes due to increase in per capita consumption (3%) and population growth (1.76%). Also lower price of veg. oils boost the consumption of veg. oils during the year.

iii) Closing stock of imported veg. oils as on 31st October increased by 2.60 lakh tonnes to 15.70 lakh tonnes.

iv) Malaysia and Indonesia pushed the palm oil export into India during the year to reduce their excessive stock burden.

v) Due to inverted export duty structure by Indonesia, import of RBD Palmolein substantially increased during the year.

vi) The overall consumption increased by about 12.5 lakh tonnes, leading to higher import during the year

Current stock of edible oils as on 1st November, 2012 at various ports is estimated at 920,000 tonnes (CPO 600,000 tonnes, RBD Palmolein 95,000 tonnes, Degummed Soybean Oil 125,000 tonnes, Crude Sunflower Oil 85,000 tonnes and Canola Rape Oil 15,000 tonnes) and about 650,000 tonnes in pipelines. Closing stock increased by 2.60 lakh tonnes at the end of the year and reported at 15.70 lakh tonnes.

During Oil Year 2011-12(Nov-Oct) Palm Oil import increased to 76.69 lakh tonnes compared to 65.47 lakh tonnes during the last year and the same time soft oil import also increased to 23.12 lakh tonnes, consisting of 10.79 lakh tonnes of soybean oil, 11.35 lakh tonnes of sunflower oil, 0.91 lakh tonnes of rape oil and 0.07 lakh tonnes of other soft oils compared to 18.24 lakh tonnes during the same period of last year.

Export of oil meals between April - October 2012 down by 30%

The Solvent Extractors’ Association of India has just compiled the export data for export of oil meals for the month of October 2012. The export of oil meals during October 2012 is reported at 121,919 tonnes compared to 354,698 tonnes in October 2011 i.e. down by 66%. The total export of oil meals during April to October 2012 has reduced and reported at 1,724,984 tonnes compared to 2,451,499 tonnes during the same period of last year i.e. down by 30%. High price of soybean seed resulted into lesser crushing and availability of soybean meal for local as well as for the export. Lack of buying by Iran and disparity in export of soybean meal due to high price in local market resulted into steep fall in its exports.

South Korea – Highest Importer of Oil meals from India:

Oil meal import by South Korea from India during April to Oct., 2012 is reported at 492,286 tonnes compared to 378,746 tonnes last year consisting of 55,202 tonnes of soybean meal, castor meal of 203,722 tonnes and 233,362 tonnes of rapeseed meal. Vietnam another major market, imported of 228,488 tonnes compared to 314,727 tonnes last year consisting of 47,685 tonnes of soybean meal, 27,889 tonnes of rapeseed meal, 1,412 tonnes of groundnut meal, 502 tonnes of castor meal and entire quantity of 151,000 tonnes of rice bran extraction. Japan imported 106,923 tonnes compared to 615,377 tonnes of last year consisting of 106,545 tonnes of soybean meal, 279 tonnes of rapeseed meal and 99 tonnes of castor meal.

Thailand imported of 121,914 tonnes compared to 161,238 tonnes, consisting 61,334 tonnes of soybean meal, 60,491 tonnes of rapeseed meal and small quantity of 89 tonnes of Castor meal. Indonesia imported 104,064 tonnes compared to 128,591 tonnes consisting of 74,813 tonnes of rapeseed meal and 29,251 tonnes of soybean meal. Iran imported of 456,687 tonnes compared to 175,962 tonnes, consisting 440,687 tonnes of soybean meal, and 16,000 tonnes of rapeseed meal. Europe and others have imported 31,326 tonnes compared to 49,833 tonnes of last year.

Port-wise Export: April-Oct., 2012

The export from Kandla is reported at 1,173,079 tonnes (68%), followed by Mumbai including JNPT handled 189,838 tonnes (11%), Mundra handled 113,189 tonnes (7%),Bedi handled 79,290 tonnes (5%) ,Kolkata handled 151,000 tonnes (9%) and Vizag handled 10,243 tonnes (1%).

India's import of vegetable oils up by 18%

As per the latest data released by the Solvent Extractors’ Association of India (SEA), import of vegetable oils (edible & non-edible) during first eleven months of current oil year indicates 17.80% increase in import. Import during September 2012 is reported at 993,912 tonnes compared to 912,341 tonnes in September 2011, consisting of 976,417 tonnes of edible oils and 17,495 tonnes of non-edible oils i.e. up by 8.94%. The overall import of vegetable oils during November 2011 to September 2012 is reported at 9,156,457 tonnes compared to 7,773,184 tonnes i.e. up by 17.80%.

Surged in Import of Sunflower Oil:

During Nov., 2011 to Sept., 2012 import of sunflower oil is reported at 1,049,181 tonnes compared to 739,173 tonnes during the same period of last year. Sunflower oil is a major contributor in meeting demand for soft oil, as sunflower oil prices have been attractive compared to soybean oil. Currently the premium on sunflower oil over soybean oil is just US$ 11 per ton and also sunflower oil is preferred oil by housewives in India. Also, India has started importing canola oil and bought about 90,000 tonnes during last 8 months compared to 3,601 during same period of last year, mainly due to lesser local crushing of rapeseed due to disparity.

Stock Position at Port and in Pipelines:-

Current stock of edible oils as on 1st October, 2012 at various ports is estimated at 880,000 tonnes (CPO 510,000 tonnes, RBD Palmolein 110,000 tonnes, Degummed Soybean Oil 130,000 tonnes, Crude Sunflower Oil 115,000 tonnes and Canola Rape Oil 15,000 tonnes) and about 570,000 tonnes in pipelines. Total stock, both at port and in pipelines is decreased by 100,000 to 1,450,000 tonnes due to reduced local production and festival demand compared to last month.

Import of Non-edible oils during September 2012 is reported at 17,495 tonnes compared to 33,472 tonnes during the same period last year. The overall import of non-edible oil during Nov., 2011 to Sept., 2012 is reported at 193,104 tonnes compared to 279,524 tonnes during the same period of last year i.e. down by 31%. 

Report of the Rangarajan Committee on Deregulation of Sugar Sector in India

Prime Minister had set up a committee under the chairmanship of Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister to look into all the issues relating to the deregulation of the sugar sector. The committee has completed its task, after several rounds of deliberations, consultations with stakeholders, and discussion with Chief Ministers of major sugar-producing states. The report was submitted to the Prime Minster on 10-10-2012. Following are the excerpts from the report:

1. A major recommendation of the committee relates to revising the existing arrangement for the price to be paid to sugarcane farmers, which suffers from problems of accumulation of arrears of cane dues in years of high price and low price for farmers in other years. The existing arrangement comprises a Fair and Remunerative Price (FRP) announced each year by the Centre, under the Sugarcane Control Order and on the advice of CACP, as the minimum price of sugarcane. However, many states in north India also announce a State Advised Price (SAP) under state legislation. Generally, the SAP is substantially higher than the FRP, and wherever SAP is declared, it is the ruling price. Instead of the present arrangement, the committee has proposed that at the time of cane supply, farmers be paid FRP as the minimum price, as at present. Further, subsequently, on a half-yearly basis, the state government concerned would announce the ex-mill prices of sugar and its by-products, and farmers would be entitled to a 70% share in the value of the sugar and by-products produced from the quantity of cane supplied by each farmer. Based on the share so computed, additional payment, net of FRP already paid, would then be made to the farmer. Since the sugar value estimate includes return on capital employed, this implies that farmers would also get a share of the profits. With such a system in operation, states should not declare an SAP.

2.The committee has also recommended dismantling of the levy obligation for sourcing PDS sugar at a price below the market price. States should be allowed henceforth to fix the issue price of PDS sugar, while the existing subsidy to states for PDS sugar transport and the difference between the levy price and the issue price would continue at the existing level, augmented by the current level of implicit subsidy on account of the difference between the levy price and the open market price. This will free the industry from the burden of a government welfare programme, and indirectly benefit both the farmer and the general consumer since the industry passes on the cost of levy mechanism to farmers and consumers.

3. The committee has recommended dispensing with the present mechanism of regulated release of non-levy sugar, as it imposes additional costs on factories on account of inventory accumulation.

4. The committee has recommended that cane area reservation ultimately be phased out and contracting between farmers and mills allowed for enabling theemergence of a competitive market for assured supply of cane, in the interest of farmers and economic efficiency. However, in case some states want to continue it for the time being, they should do so while ensuring that area reservation is done for at least three to five years at a time, so that industry has a stake in its development. Further, wherever and whenever a state discontinues area reservation, the Centre should remove the stipulation of a minimum distance between two mills.

5. On external trade, the committee has favoured a stable policy regime with modest tariff levels of 5% to 10% ordinarily, and dispensing with outright bans and quantitative restrictions. The committee has also recommended dispensing with the mandatory requirement of jute packaging. In respect of molasses, the committee favours free movement and dismantling of end-use based allocation quotas that are in vogue in several states, to enable creation of a national market and better prices for this valuable by-product as well as improved efficiency in its use.

Oilmeal exports down in April-September as soya meal turns dearer

The Solvent Extractors’ Association of India has just compiled the export data for export of oil meals for the month of September 2012. The export of oil meals during September 2012 is reported at 143,990 tonnes compared to 402,500 tonnes in September 2011 i.e. down by 64%. The total export of oil meals during April to September 2012 has reduced and reported at 1,603,065 tonnes compared to 2,096,801 tonnes during the same period of last year i.e. down by 24%. High price of soybean seed resulted into lesser crushing and availability of soybean meal for local as well as for the export. Lack of buying by Iran and disparity in export of soybean meal due to high price in local market resulted into steep fall in its exports. The slump was largely due to a 97 per cent drop in soya meal shipments and a 63 per cent decline in castor seed extracts.

Edible oil extractors had cut down production due to high soya bean prices. This has resulted in lower soya bean meal availability and pushed up prices in the domestic markets. With higher realization in domestic markets, there was very little interest on exports of soya meal extracts. However, the export of rice bran extracts increased by 48 per cent in September to 23,400 tonnes.

Lack of buying interest by traders in Iran and other countries also pulled down exports in September, said a press release issued on Friday by Solvent Extractors’ Association of India.Interestingly, Iran has emerged as the largest buyer of Indian soya meal extracts in the first six months of the current fiscal accounting for more than half of Indian exports. Iran imported 4.4 lakh tonnes of the total soya meal exports of 8.22 lakh tonnes in the April-September period. The recent bilateral payment mechanism that allows importers in Iran to make payments in Indian rupees has aided the soya meal shipments.

For the April-September period, Iran imported a total of 4.57 lakh tonnes of Indian oil meals compared to 1.5 lakh tonnes in the corresponding period last year. The drop in export demand pulled down soya meal prices to $668 a tonnes in September against $760 realized in August.

Rapeseed meal was also quoted lower at $325 a tonnes against $343 a tonnes in August. The appreciation in value of rupee against dollar to Rs 54.35 in September against Rs 55.49 in August also discouraged exports.

Demand from South Korea was down seven per cent at 63,734 tonnes (68,540 tonnes) in September. However, South Korea has replaced Japan as the largest buyer of Indian oil meal extracts in the first half of the current fiscal. South Korea imported a total of 4.59 lakh tonnes of oil meal extracts against 3.38 lakh tonnes in the corresponding period last year.

Japan, which had imported close to five lakh tonnes of Indian oil meals in first half of 2011-12, bought only 85,181 tonnes so far this year.

Rajesh Agarwal, spokesperson for Soya bean Processors Association of India, attributed the slump in exports to high prices. Buyers had preferred to wait-and-watch the prices mainly due to the concern over output in the US, he said.

During September, Thailand more than halved its imports to 17,330 tonnes from 36,032 tonnes, while that of Indonesia fell 75 per cent to 2,580 tonnes from 10,228 tonnes. Vietnam was the only country which increased its order to 40,100 tonnes from 27,924 tonnes.

Rice exports from India to be record 10 MT in 2011-12 year: USDA

According to the US Department of Agriculture (USDA), rice exports estimated for India are revised upward by two million tonnes to a record 10 million tonnes in the 2011-12 marketing year (October-September) after taking into account the official trade reports.

India re-entered the rice exports market in September 2011 after a four-year ban on exports of non-basmati rice.

It said that the country is estimated to have shipped 8.2 million tonnes of rice in the first nine months of the 2011-12 marketing year. Of which, 5.5 million tonnes was non-basmati rice and 2.7 million tonnes basmati rice.

“Assuming some spill-over of export shipments lying at Kakinada to October, rice exports during July-September are likely to exceed 1.8 million tons, which will take rice exports in 2011-12 to a record 10 million tonnes,” it added.

Quoting trade sources report, the USDA said that export of basmati and non-basmati rice have been steady during the months of July through September on strong export demand and relatively stable Indian rupee vis-is US dollars.

That apart, the USDA said, “Indian non-basmati rice for export remains very price competitive, with Indian common rice varieties ranging from $375—450 per tonne on freight on board (FOB) in the fourth week of September.”

The “unexpectedly” strong export demand for rice has resulted in port congestion at Kakinada in the east coast with reports of about 6,00,000 tonnes of rice currently lying in the port for export shipment, it noted.

Lower rainfall in July-August, particularly in coastal Gujarat and Andhra Pradesh, has also facilitated movement of rice for export, it added.

The report also said that the government is likely to continue with the current rice export policy due to surplus domestic supplies and abnormally large government foodgrain stocks.

The government rice stocks stood at 25.59 million tonnes as on September 1, nearly 2.9 million tonnes higher than the last year’s level.

India, the world’s largest rice grower, had produced a record 104.32 million tonnes of rice last year due to good monsoon.

Pulses and edible oils production may fall this year

Though rice, wheat and sugar production is expected to be at comfortable levels, production of pulses and edible oils may fall short of requirement this year, said K.V. Thomas, Union Minister of State for Consumer Affairs, Food and Public Distribution.

Talking to a group of journalists after inaugurating the Centenary Building of National Test House (Southern Region) yesterday, he said according to the assessment of the Meteorology Department and the Ministry of Agriculture, this year production of rice and wheat will be as good as last year.

Last year, production of paddy was to the tune of about 103 million tonnes and wheat was to the tune of 94 mt. More or less, the same quantity of rice and wheat is expected this year as well.

He said his department has discussed with various State Government officials for the procurement of rice and wheat. All arrangements have been made, including jute bags.

His Ministry has called for a meeting of the Food and Public Distribution Ministry officials of all states on October 29 and 30 in Delhi. All other procurement details will be worked out that time.

On storage capacities, he said five years ago there was a capacity to store 55 mt of foodgrains. Now, it has been expanded to 75 mt. By the end of this year, another 45 lakh tonne capacity will be added.

About 151 lakh tonnes of new capacity will be added by the end of 2013. Besides, two million tonnes of silos will also be constructed. “Hence, I don’t see any problem as far as the storage issue is concerned.”

Regarding sugar, he said last year the production was projected at 240 lakh tonnes. However, finally it ended up with 262 lakh tonnes, while the domestic need was only 220 lakh tonnes.

This year, the projection is at 230 lakh tonnes, which is quite sufficient. “We think, even this year, sugar production will surpass the projection and go up to 240-245 lakh tonnes,” he said.

But, he said his Ministry is “slightly worried” about the pulses and edible oils situation. Chances are that the production of pulses and edible oil come down this year. Even internationally, availability is slightly low.

With this in mind, he said, the Government has decided to continue with the supply of pulses and edible oils at subsidised price. This year, the subsidy on pulses will be Rs 20 a kg and on edible oils Rs 15 a litre. States are also allowed to import pulses and edible oil for distribution and it will be subsidised by the Central Government, he said.

Besides, the Central Government has decided to computerise the Public Distribution System end-to-end — from the Food Corporation of India godowns to state-run ration shops, every movement will be computerised. It is a 50:50 project, funded by the Central and respective State Governments.

Earlier there were 20 crore ration cards in the country. After the computerisation process began in some states, two crore cards were found to be bogus and eliminated from the system, he said. “PDS system has to be modernised. All the loopholes are to be plugged to strengthen the system, and make it more efficient,” he said.

Talking about the Food Security Bill, he said the Bill is being considered by the Parliament Standing Committee, and is likely to be passed. And, the Standing Committee is expected to submit its opinion in a month. “The Bill may be passed in the coming Winter Session,” he said.

Answering a question on wheat exports to Iran, he said the exports are going on under Open General Licence scheme. The central pool has 80.5 mt of wheat, while what is required for public distribution is only 55 mt. So, exports will continue till the need to stop it arises.

On food subsidy bill and whether the government plans any cut, he said the government is bound to give food items on subsidised rates. At present, he said, food subsidy alone accounts for Rs 88,000 crore, and it will continue. “There is nothing to be worried,” he said.

Indian Rice Exports Eased Global Prices

Agriculture Minister, Shri Sharad Pawar yesterday sought to highlight India’s role in stabilising global food supplies and moderating price rise.

The Minister was addressing the meeting of the ‘High Level Regional Consultation on Policies to Respond to High Food Prices in Asia and the Pacific Region’ organized by FAO at Bangkok.

From an importing nation India has now become a nation that exports wheat and rice, the Agriculture Minister said. “I am glad to inform that our efforts are showing excellent outcomes. From having to import about 6.5 million tonne of wheat in 2006 and 2007 we are now not only meeting the domestic demand but have also begun contributing to global supply through exports. Similarly, in case of rice, we faced problems in 2009 as our buffer stocks kept for supplies under public distribution system had dipped due to inadequate production. In the past twelve months, however, due to record production over the years, we have already exported about 8 million tonne of rice. The exports from India has not only stabilized the global supplies but have helped in easing the ruling high prices to affordable levels.”

Stating that increasing agricultural production and diversifying the production base has become the need of the hour, he said, “India has been following since 2007 the strategy of agricultural development by widening the production base and focusing attention to high potential low producing areas through intensive promotion of technologies in order to bridge the yield gaps.”

Laying stress on the global food economy in domestic context he went on to state “In order to better understand the global food economy in domestic context we in India have initiated a study project on developing Agricultural Outlook where situation analysis and forecasts are prepared periodically for the short and the medium terms. We are grateful to FAO for supporting this initiative with technical assistance on international exposure and capacity building. We believe that informed decisions based on sound analysis help develop better understanding of food situation internationally and locally.”

Informing the various international organizations and policy experts gathered at the consultation meeting he informed: “India is actively involved in the evolution of these mechanisms, for shaping the information system for a sound real time analysis of the developing situation on supply, stocks, trade, demand and prices of food grains in different parts of the world. We believe that credible information generated by the system would be a valuable input for any policy initiative at the country level should any of the supply, price or trade shocks cause disruption in food availability. Better information is the key to being better prepared.”

He further said, “South Asian Countries have started a SAARC Food Bank to service the needs of the member countries in case of any supply shock as a result of calamities or otherwise. There is need to strengthen such regional cooperation instruments to respond to the developing global food crisis. It is our collective responsibility to reach out to those vulnerable populations whose access to food is compromised due to high food prices.”

CACP favours MSP hike for rabi pulses, oilseeds

The Commission for Agricultural Costs and Prices (CACP) has recommended to the Government a hike in minimum support price for winter-sown pulses and oilseeds by up to Rs 500 a quintal.

The Agriculture Ministry will move a Cabinet note on this after seeking comments from the ministries concerned and the state governments.

A senior government official said the CACP has not recommended raising the minimum support price (MSP) of wheat and barley for the 2013-14 rabi marketing season (April-March) in view of excess supply in the country following record production last year.

It suggested keeping the MSP of wheat and barley unchanged at Rs 1,285 per quintal and Rs 980 per quintal, respectively.

The Commission has recommended no increase in wheat MSP because the wholesale prices of the grain are currently ruling below support price at Rs 1,160 per quintal.

But the production cost was around Rs 1,066 per quintal in 2012-13. A similar trend was seen in barley, the official said.

“However, the CACP has suggested the Government to announce 10 per cent bonus to wheat and barley farmers if exports are banned next year,” the official said.

To boost the production of pulses and oilseeds, the CACP has proposed increase in the MSP of gram by Rs 200 to Rs 3,000 a quintal and masur dal by Rs 100 to Rs 2,900 a quintal for 2012-13 rabi season.

Similarly for oilseeds, the Commission has recommended increase in the support price of mustard seed by Rs 500 to Rs 3,000 a quintal and safflower by Rs 300 to Rs 2,800 per quintal.

The reasons given were that the cost of production of pulses and oilseeds has increased substantially over the last few years and the increase in support price will encourage farmers to grow these crops, the official said.

While sowing in rabi (winter) season starts from October, the harvesting of crops is undertaken during April-March.

The Government aims to achieve foodgrains production of 130 million tonnes during the 2012-13 rabi season. Of this, 86 mt would be wheat, 12.5 mt of pulses, and 15 mt of rice.
Source: Hindubusinessline

117.18 MT Food grain Production Estimated in the Kharif Season

As per the First Advance Estimates of production of Kharif crops, 117.18 million tonnes (MT) food grains is likely to be produced in the current season.

These production estimates are higher than the average of the first advance estimates of the last five years (113 MT). Final estimates are generally 5 to 10% higher than the first estimates. Even as compared to the average of final estimates (118.86 MT), the current estimates are lower by 1.68 million tonnes or about 1.4% despite deficient and late rains this year.

These estimates were released by Agriculture Minister, Sharad Pawar today. Speaking on the occasion, the Minister said, the estimates were higher than expectations considering the truant monsoon rains.

The assessment of production of different crops is based on the feedback received from States and validated with information available from other sources.

The estimated production of major crops during Kharif 2012-13 is as under:

Food grains ‒ 117.18 million tonnes
Rice ‒ 85.59 million tonnes
Coarse Cereals ‒ 26.33 million tonnes
Maize ‒ 14.89 million tonnes
Pulses ‒ 5.26 million tonnes
Tur ‒ 2.78 million tonnes
Urad ‒ 1.14 million tonnes
Oilseeds ‒ 18.78 million tonnes
Soyabean ‒ 12.62 million tonnes
Groundnut ‒ 3.82 million tonnes
Castorseed ‒ 1.40 million tonnes
Cotton ‒ 33.40 million bales (of 170 kg each)
Sugarcane ‒ 335.33 million tonnes

As per 1st advance estimates, production of Rice estimated at 85.59 million tonnes, though lower as compared to last year’s record Kharif production, is higher than the average production of 83.17 million tonnes.

The estimated production of Coarse Cereals, is however, lower than average production by 3.65 million tonnes mainly on account of loss in area coverage under Bajra and Maize in the States of Gujarat, Haryana, Maharashtra, Karnataka and Rajasthan.

The estimated production of Kharif Pulses is also lower than the average production by 0.45 million tonnes mainly due to shortfall in Moong and other Kharif Pulses.

Though there is a significant increase in estimated production of soya bean, yet due to decline in the production of Groundnut, total production of Kharif Oilseeds estimated at 18.78 million tonnes is lower than the average production by 0.61 million tonnes.

The current year’s production of Sugarcane estimated at 335.33 million tonnes is higher by 10.22 million tonnes as compared to average production.

The estimated production of Cotton at 33.40 million bales (of 170 kg each) has registered an increase of 5.32 million bales as compared to average cotton production of 28.08 million bales. Production of Jute is also estimated to be marginally higher than the average production.

Sugar output to surpass demand

The country’s sugar production is set to exceed domestic consumption for the third consecutive year in 2012-13 season starting October. This is despite a lower crop in Maharashtra and Karnataka, where dry spells triggered by poor rain in early part of the monsoon, hurt the standing cane crop.

The loss in these two States, which contributed to around 45 per cent of the country’s total output, is largely made up by Uttar Pradesh, where farmers – buoyed by higher returns last year – have planted cane on an additional area of 2.2 lakh hectares.

Moreover, the sharp decline in cane arrears has aided the trend. The overall cane acreage is higher by 4.5 per cent at 52.88 lakh hectares than last year’s 50.63 lakh hectares. Though the rains have recovered in late August, the damage triggered by dry spells is unlikely to be neutralized.

Despite a decline in output, the industry expects the surplus for exports to be around 1.5 million tonnes against 4 million tonnes last year. The higher surplus coupled with rise in output kept Indian exporters active in the global markets, with shipments touching about 3.5 million during 2011-12 season.

The opening balance at the beginning of 2012-13 season is pegged at 6 million tonnes, marginally lower than last year’s 5.5 million tonnes. The third successive year, where production has been higher than consumption, points towards a stabilizing trend in the sugar industry.

The bullish trend in sugar prices, which the millers are comfortable with should possibly help them break the cycle. The uncertainty in Maharashtra crop sparked a rally in prices, which are now in the Rs 33-35 a kg at the ex-factory level, against Rs 28-29 the previous year. The prices are expected to remain firm going forward on strong demand, which is growing over 2.2 per cent annually.

The consumption in 2011-12 is estimated at 22 million tonnes. The firm trend should augur well for millers helping them pare their losses. In Maharashtra, the output according to ISMA’s estimates is at 6.5 million tonnes, down from 8.95 million tonnes last year.

The dry spells did force the farmers to divert cane to fodder and ISMA estimates that up to 3.5 million tonnes cane was diverted to fodder since May. The cane area reported by the State stood at 9.04 lakh hectares in August (10.25 lakh hectares).

In Karnataka, ISMA estimates a 21 per cent decline in output at 3 million tonnes (3.8 million tonnes). The cane area in the State has dropped by 2 per cent and the sugar recovery will be hit as scanty rain has affected the crop.
However, production in Uttar Pradesh is expected to be 13.27 per cent higher at 7.9 million tonnes on good rains helping yields and recovery.

UP produced 6.97 lakh tonnes of the sweetener last year. Meanwhile, in Andhra Pradesh, sugarcane area will be 10-20 per cent lower than the normal area of 2 lakh hectares. Multiple factors have led to this situation.

While farmers in some areas shifted to maize and soya, those in the delta area feel that the cane coverage could be 75 per cent of the normal area.
Source: Hindu Business line

Open market sale price for grain reduced

Following the lukewarm response to its Open Market Sale Scheme (OMSS), which is meant to offload excess grain stocks held with the Food Corporation of India (FCI) and state agencies to bulk buyers and small traders, the government has decided to reduce the price of grain offered under the scheme.

Henceforth the government would sell grain, mainly rice and wheat, to bulk buyers at a price calculated on the basis of purchase price for the FCI (the minimum support price offered to farmers) and half of the cost of freight from Ludhiana to the purchasing locations.

Earlier, the OMSS prices included the cost of purchase for the FCI and actual freight cost from Ludhiana. “Because of bumper production and sufficient stocks with FCI, the market price for all grain is below the OMSS price, leading to a lower offtake under the scheme,” said an FCI official.

Under OMSS, the government had allocated 1.2 million tonne wheat to bulk buyers such as floor millers during April-September this year. However, it could sell only 60,881 tonne till now and since last August, there are hardly any buyers for OMSS wheat.

“We will offer a lower rate for wheat under OMSS and an empowered group of ministers (EGoM) would decide the price during the next few weeks,” KV Thomas, Union food minister, had told FE in September.

“At present, while wheat under OMSS is offered at R1,158 per quintal, the prevailing market price is well below the price offered under the government scheme,” said a Delhi-based trader.

The extra allocation of wheat under OMSS to states for retail distribution has also not taken off. Against the allocations of close to one million tonne wheat during April-September 2011, states have lifted only 82,677 tonne.

According to the latest stock position with FCI and state agencies at the start of this month, the government has total grain stocks of 51.7 million tonne against the buffer stock and strategic reserves norm of 21.2 million tonne. The FCI and state agencies have a wheat stock of 20.3 million tonne and rice stock of 31.4 million tonne.

OMSS was launched in 2008-09 to sell excess wheat stocks in the open market. However, it has mostly failed to attract a large number of buyers due to the high price offered when compared to the market price.

In a bid to cut down on the cost involved in physical tendering, the FCI has been using the National Spot Exchange Limited platform to sell wheat under to bulk buyers under the scheme.

According to an FCI official, e-auctioning, besides reducing transaction cost, ensures quick settlement of payment and delivery, in turn leading to better price discovery. (Financial Express).

Kharif oilseed output may fall 4-5% on crop damage

The country’s total oilseed production this kharif harvesting season is likely to decline by four-five per cent season due to severe crop damage, especially of soybean, in major areas of Madhya Pradesh, India’s largest producing state. Against the first advanced estimate of 20.89 million tonnes (mt), given by the ministry of agriculture, the industry has pegged the total output at around 20 mt. The total oilseed output has stood at 20.85 mt last kharif season.

“We are certainly considering to lower the soybean crop estimates, though marginally, by 100,000-150,000 tonnes from the earlier estimates of 11.65 mt released on September 30, as the crop damage has been larger than expected,” said Rajesh Agrawal, spokesperson of the Soybean Processors Association of India (Sopa), an Indore-based trade body.

At major centres around Bhopal and Disa, soybean crop was severely affected due to waterlogging in fields. As a result, the yield in this region was likely to fall at least 33 per cent to 750 kg per hectare from 1,000-1,100 kg last year. Considering these, the earlier production forecast was unlikely to be met, especially for soybean, despite an increase of 1 million hectares in acreage, said Agrawal.

Not only the government, but industry trade bodies, along with other stakeholders, had earlier forecast India’s oilseed output to be bumper, setting new record this year. Traders hoped the import of vegetable oil would decline this year due to higher domestic output. But, with oilseed output estimated lower, India’s reliance on overseas import may continue, even widen, due to a sustained increase in per-capita consumption.

India imports crude palm oil from Indonesia. But, as the Indonesian government raised export duty on crude palm oil, Indian traders have increased the import of refined edible oils not only from Indonesia but also from other major destinations like Malaysia and Argentina. India imports 8.5-9 mt of vegetable oil to meet its domestic annual need of 15.5 mt.

Industry veteran Gobindbhai Patel, however, has already factored in the crop damage across all oilseed segments and forecast soybean output even lower than the industry’s estimates to 10.5-10.7 mt, against the last year’s output at 9.8 mt.

The case is somewhat similar for groundnut. Against the government estimate of 410,000 tonnes, the Mumbai-based Indian Oilseeds and Produce Export Promotion Council expects groundnut output to be 407,000 tonnes, almost the same as last year. The agency, however, estimated a 22 per cent fall in sesameseed output to 311,000 tonnes, which may be revised.

The rapidly falling acreage is set to bring down the sunflower seed output to 130,000 tonnes this summer-sown season from 140,000 tonnes last year.

“The government’s oilseed figures have always been unrealistic which vary with the figures from the trade with a wide margin. Therefore, the government’s production figures can not be relied upon. Trades always assess individual oilseed crops after visiting the field and considering all factors including post harvest management,” said Patel.

According to Naveen Mathur, associate director of Angel Broking, the oilseed output during the current kharif harvesting season beginning October may fall even below 20 mt due to crop damage in groundnut and soybean following unseasonal rainfall in the crop maturing period. (Business Standard)

Rice exports from India may rise on Thai supply cut

India, the world’s second-largest rice producer, may ship 2 million tonne before March as African buyers seek cheaper alternatives to supplies from flood- hit Thailand, according to KRBL, an exporter.
“Today the cheapest rice is available in India, and that is why there is a lot of demand,” Anil Kumar Mittal, chairman of the New Delhi-based exporter, said in a phone interview. “Indian supplies of white rice are at least $135 a tonne cheaper than those from Thailand, the biggest exporter,” he said.

Rising supplies from India may ease rice prices in Chicago, which have climbed 20% in the past year, and cap global food costs monitored by the United Nations that increased 16% in September from a year earlier. Rice is the best- performing grain this year on concern that damage to crop from the worst floods in Thailand in 50 years and dry weather in Texas in the US will shrink global supplies.

“Indian exporters have signed contracts to ship about 8,00,000 tonne of the grain after the government scrapped restrictions on exports last month,” Prem Garg, managing director of Shri Lal Mahal, an exporter, said.

Buyers from African countries were signing deals to import Indian rice at prices ranging from $350 a tonne and $500 a tonne, free-on-board basis, he said.

India, which banned private companies from shipping non-basmati rice in April 2008 amid a global food crisis, partly lifted that restriction in July. “Exports may total 4 million tonne in the year that began on April 1,” Vijay Setia, president of the All India Rice Exporters Association, said on September 13.

“Thai exporters are in a dilemma now because when the government purchase program was announced, India hadn’t decided to sell its rice,” said Garg.

Thailand started a government-purchase program this month, at prices as much as 44% above market rates, to boost crop prices and rural incomes. The nation’s Permanent Secretary for Commerce Yanyong Phuangrach said on October 14 that the flooding will have a limited impact on rice shipments, and exports this year will be more than 11 million tonne.

Tropical storms have flooded 62 of Thailand’s 77 provinces, damaging 8.4 million rai (1.3 million hectares), or 14% of rice land, the Department of Disaster Prevention and Mitigation said on Monday. Unmilled rice output may be cut by 3.5 million tonne this year and floods were delaying exports, Korbsook Iamsuri, president of the Thai Rice Exporters Association said on Monday.

“The floods in Thailand may not impact global supplies much as the crop is quite good and they will not have any problem in supplying to buyers,” Garg said. Rough rice for delivery in November traded at $16.46 per 100 pounds on the Chicago Board of Trade. The price touched $16.815 on Monday, the highest level since September 23. Prices will be steady at current levels till December, Garg said.
Bloomberg

Minimum support price for rice likely to be increased

India is likely to raise the price it pays to local farmers to buy rice in the new season which began this month, the food minister said on Thursday, a move that could help the government win political support but also stoke inflation.

The world’s second-biggest rice producer is expected to harvest at least 87 million tonne of summer-sown rice, adding to existing stocks of 22.7 million tonne. The government procures grain for its various welfare programmes.

“We have agreed to give a bonus to farmers for rice procurement. The government will take a decision soon,” K V Thomas told reporters.

The government currently pays local farmers R1,080 ($22.061) for a tonne of rice. While increasing the price it pays farmers will help the government win political support ahead of a string of state elections next year, it could worsen already high inflation.

India’s food price index rose 9.32% in the year to October 1 , and the central bank's raising of interest rates a dozen times in the past 18 months has hardly helped rein in prices.

Following a good monsoon, India is likely produce a record 245 million tonne of grain in 2011-12, up 1.4% from a year ago, raising hopes of more exports that could help bring relief to Asian importers trying to combat food-led inflation.

Thomas said the government would procure at least as much rice as it did last year— a figure that stood at 33.6 million tonne.We have enough space to store new season rice, he said.

Higher supply lead to fall in coconut oil prices

An increase in supply from Tamil Nadu and Kerala has led to a sharp fall in the price of coconut oil. The price today dropped to Rs 7,500 a quintal in the local market, which had touched the peak of Rs 10,400 a quintal during the second week of May.

With the end of monsoon, processing of coconut was active in Kerala, especially in the northern districts of Malappuram, Kannur and Kasargode. So, copra supply to crushing mills had increased now, said Thalath Mehamood, president, Cochin Oil Merchants Association (COMA).

The sharp increase in production in Tamil Nadu also caused a fall in wholesale prices in Kankayam, the largest coconut oil market in India. The price fell below Rs 7,000 last week. This sharp fall raised demand from FMCG companies, leading to an improvement in prices.

A section of traders told Business Standard that production of copra is yet to be active in the southern districts of Kerala, hence supply would be tight in the coming weeks. The demand for tender coconut is also on a rise after the monsoon.

The retail price of tender coconut increased to Rs 20 for each in most parts of the state. So a major chunk of coconut farmers now opt this channel as for ripe coconut they get a maximum price of Rs 10-12. This also affects the production of good quality copra in Kerala as well as in Tamil Nadu.

Meanwhile, the drop in the price of palm kernel oil also led to the fall in coconut oil price. Palm kernel oil is being widely mixed with coconut oil and sold at lower rate.

Every time coconut oil price increases, adulteration also rises. Now adulteration is active as the price of palm kernel oil dropped to Rs 5,200 a quintal from Rs 10,200 few months back. Palm kernel oil is a suitable mix for adulteration of coconut oil and 25-30 per cent mixing cannot be detected easily.

Due to this mixing, coconut oil is offered at lower rates in the retail segment. This practice is widely uses in crushing mills of Tamil Nadu that helps dealers to offer lower rate for coconut oil.

As main production season of coconut and copra begins in December, market is likely to be in a low phase, with fluctuation in prices based on the swing in demand for the next six-eight weeks.
(Business Standard)

Turmeric crop likely to be good this season

India is expected to have a bumper turmeric output this kharif season. Farmers increased area under sowing for the spice as they received higher returns for the produce last year.This year, the total production is estimated to be around 8.5 million bags (1 bag= 75 kg), while it stood at 6.5 million bags in 2010-11 and 4.8 million bags in 2009-10, traders said.

“Farmers earlier got around Rs 20-35 a kg for their produce. In the last two years, farmers have been getting good returns of Rs 175-225 a kg,” said Manubhai Shah, a Navi Mumbai-based trader.

Erode in Tamil Nadu is estimated to produce 4.5 million bags this year, compared to 3.5 million bags last year.

Farmers received a good price for their crop in the last two years, which led farmers in Andhra Pradesh and Tamil Nadu to increase acreage under the spice. Although prices have begun to witness a fall, but in 2010, prices had reached an all-time high of Rs 16,000 a quintal.

Prices have seen a decline since January as last year’s production and arrivals reached at their peak. This year’s carryforward stock could be between 1.5 million bags and 2 million bags, taking the total stock for 2011-12 to over 10 million bags, thus, stocks would be higher.

Sowing is still on and has picked up on better weather conditions. Fresh crop comes to the market from January.

Traders and analyst say prices of the spice will rise for few more weeks on strong domestic and international demand, but, bumper production will soon begin to weigh on the price of the commodity when arrival season comes near.

Turmeric prices on NCDEX have begun to move northward from September 27 and have so far seen a 23 per cent rise to Rs 5,432 a quintal.

“Currently, domestic demand is strong from north India due to the ongoing festive season, and export demand for the spice is coming in from Singapore and Malaysia,” said Nalini Rao, a spices research analyst at Angel Commodities.

Turmeric exports rose 52 per cent to 36,500 tonnes during April-August this year, according to the data released by the Spices Board of India.

Price of turmeric at spot markets varied from Rs 6,000-7,200 a quintal depending on the quality. Traders said buying support from stockists as well as retailers, driven by seasonal demand against restricted arrivals mainly pushed up prices. (Business Standard)

Chana futures fall below spot market prices

Chana futures have seen a huge volatility in the last two weeks. After commodity futures market regulator, the Forward Markets Commission (FMC), imposed a 10 per cent margin on buy-side trades (futures), prices crashed 15 per cent. In the spot market, prices are higher compared to futures.

However, prices are now stabilising and imported containers of chana (chickpeas) and other pulses have started coming in, resulting in softening of spot prices. However, prices in the spot market have fallen only by 10 per cent during the period.

Chana prices were rising in futures, but there were wide-scale complaints that speculators are rigging prices. Although chana’s availability was a concern, there were some fundamentals that were pushing prices. The sharp jump in futures, that was putting rising pressure on prices in the physical market, prompted FMC to ask exchanges, mainly NCDEX, to impose 10 per cent margin on chana buying on September 28 and since then prices have crashed almost 20 per cent.

Futures prices came down from high of Rs 3,661 a quintal on September 27 to Rs 3,097 a quintal (down 15.4 per cent) yesterday and in spot market, prices have come down from Rs 3,625 to Rs 3,258 a quintal (down 10.1 per cent) during the same period.

“However, high prices of chana will incentivise farmers to increase acreage under the crop when sowing for the next rabi season begins after Diwali,” said Bimal Kothari, vice-president of India Pulses and Grains Association, an apex body of pulses industry and trade.

Chana is majorly a rabi crop. A trader with a multinational trading company, which also imports pulses in India said, “Sharp fall in futures prices was due to high margin and after that huge mark-to-market losses let to selling. Futures prices have not fallen so sharply due to supply constraints.”

The Rajasthan government has also tightened stock limits for chana, leading to correction in prices including on futures exchanges.

New chana crop will enter markets in early February and till then, India will need one million tonnes to meet the consumption, where half of that is being met by imports. As supply from imports starts coming in, spot prices will also converge with futures, the trader said. On Wednesday, prices went up by almost two per cent in futures and physical market. (Business Standard)

Sugar prices up on Diwali demand

Sugar prices rose in the past few days at the production level leading to retail prices going up. The sugar market was bullish this week with prices rising by Rs 40-50 so far, on increased demand ahead of Diwali. Sugar futures prices are also witnessing a firm trend as the Government is considering allowing more sugar exports after Diwali.

Market sources said, firm sugar futures price and improvement in physical demand ahead of Diwali have lead to a positive sentiment.

In the spot market on Friday, S-grade sugar rose by Rs 18, while M-grade ruled steady.

At naka trades, the price increased by Rs 10 on higher demand. Eastern region buyers continued their buying in Maharashtra. On Wednesday, two rail rakes were taken by them. Good quality sugar was in big demand. Freight rates in the Kolhapur, Karad and Sangli line increased by Rs 5-8 a bag on tight availability of trucks. This improved the sentiment further.

Mr Mukesh Kuwadia, Secretary, Bombay Sugar Merchants Association, told Business Line that this month, due to Diwali, the demand has improved sharply. Bulk consumers are active buyers for fine variety. Sweet and confectionery makers will continue buying till the month end. There is no pressure at the mill level as they are selling despite the price rise.

According to an analyst, the world market scenario is positive and that will work in favour of India, especially as the production in Thailand and Brazil are expected to be lower. Higher imports by China and announcement by Pakistan that it will import four lakh tonnes of sugar this week are likely to prop up sugar prices.

In the international market, thanks to bullish demand-supply reports, December-11 sugar futures closed $14.60 higher at $684.10 from $669.50 a tonne on Thursday. Expectation of the Government giving permission to export more sugar next month has strengthened the sentiment.

Arrivals in the Vashi market were around 52 truckloads, while local dispatches were 48-50 truckloads. On Thursday, some 8-10 mills offered tenders and sold about one lakh bags to local and eastern region traders. (HinduBusinessLine)