Report Highlights:

India is expected to produce 6.4 million metric tons (MMT) of rapeseed and mustard in marketing year (MY) 2015/16. The crop will come from 6.45 million hectares and will mark a ten-percent increase over last year. An incremental rise in planted area from some non-traditional eastern, northeastern, and northern states will partially compensate for a net decline in planted area from Rajasthan. Total oilmeal exports in MY 2015/16 will decline to 1.6 MMT. Vegetable oil imports will rise upwards of 15.4 MMT.

Rapeseed and Mustard Production Expected to Rise 10 Percent Above Last Year

Based on the latest planting report from the Indian Ministry of Agriculture (MinAg) and preliminary field assessments, rapeseed and mustard production in MY 2015/16 will reach upwards of 6.4 MMT, derived from 6.45 million hectares. This production estimate is 15 percent below the previous estimate, but still ten percent above last year. Lower than anticipated planted area in Rajasthan (40 percent of total area) was partially compensated by an incremental rise in acreage from non-traditional areas such as Jharkhand, West Bengal, northeastern, southeastern states and northern states. Average yields are expected to be slightly higher than levels achieved in MY 2013/14. Note: the rapeseed and mustard standing crop suffered significant damage last year and therefore not used for comparison.

In general, planting for all major rabi (winter) crops such as oilseeds, wheat, and pulses was delayed due to the early withdrawal of 2015 southwest monsoon (June-September) and the subsequent lack of residual soil moisture. The situation compounded following a prolonged dry spell, above-normal temperatures, and a general lack of precipitation. As a result, almost fifty percent of total rapeseed and mustard crop planting extended into mid-November.

The 2015/16 winter season has been warmer than usual, excepting for a few cold spells in January, with no major incidents of pest and disease infestation. Industry sources report that the production outlook will be relatively normal. The preceding statement assumes normal weather conditions through March (harvesting period) and remains valid until the date of publication of this report.

Additionally, throughout the last 12 months, average wholesale prices for rapeseed and mustard have risen by almost fifteen percent, currently reaching INR 4,000-4,100 per quintal. Strong market prices particularly during first quarter of MY 2014/15 (INR 4,300-4,350 per quintal) encouraged farmers to plant. Farmers were also likely incentivized by the higher minimum support price for rapeseed and mustard in MY 2015/16 was raised by eight percent (INR 250) to INR 3,350 a quintal.

Additionally, area planted under taramira (Eruca sativa) oilseed crop, particularly in Rajasthan, reached 160,000 hectares, a significant increase over the 40,000 hectares planted last year. However, the planted area is still below the five-year average of 340,000 hectares. Marginal lands unsuitable for successful production of cereals are used for profitable cultivation of taramira; however, the yields are lower than rapeseed and mustard crops. Fewer farmers chose to keep their land fallow, while others switched more of their cultivable land to short-duration vegetable crops, coriander, gram, and barley.

Last Year, Rapeseed and Mustard Crop Suffered Significant Crop Loss

Post has revised down MY 2014/15 rapeseed and mustard production from 6.8 MMT to 5.8 MMT to account for crop loss due to unseasonal rains accompanied by strong winds during the harvest period. Last March, the standing crop was damaged due to lodging, pod damage, and poor quality of harvested seeds. Similarly, Post also reduces MY 2013/14 production reduced to 7 MMT, as to indicate the latest trade estimate.

Lower Peanut Planting in Traditional States Will Trim Total Production by 13 Percent

Based on the latest available planting data, Post also revises lower the MY 2015/16 peanut production from 5.5 MMT to 4.8 MMT indicating lower winter planting of peanuts in traditional states such as Telangana, Karnataka, and Tamil Nadu.

MY 2015/16 Oil Meals Export Forecast Revised Down to 1.6 MMT

Indian oilmeal exports during the first four months of MY 2015/16 were down 92 percent to 61,300 metric tons (MT), the lowest level in the last five years. Indian oilmeals (soybean and rapeseed) are out-priced on the international market due to high local oilseed prices, and lower realization from oil and meal. Additionally, competitive meal exports from other origins and a glut of low-cost vegetable oil imports (mostly palm) have dis-incentivized local oil millers, which are either running at very low capacity or have closed their operations. Consequently, Post revises down the total oilmeal export forecast for MY 2015/16 by 250,000 metric tons to 1.6 MMT, a thirteen percent from last year.

MY 2015/16 Vegetable Oil Imports Will Reach Historic High of 15.4 MMT

Vegetable oil imports grew 23 percent to 5.7 MMT in first four months of MY 2015/16. Total imports surged due to large inflow of palm and soybean oil. Indian importers were encouraged to stock vegetable oil inventory due to lower than anticipated domestic oilseed production and availability of low-cost palm oil from Indonesia and Malaysia. As per current import trends, total vegetable oil imports in MY 2015/16 will increase by upwards of 15.4 MMT, up 10 percent over last year.