Chilli Prices Fall On Rising Output

Mumbai: Envisaging chilli at Rs 30-40 a kg may have been a far cry some time ago, especially when prices were going up to Rs 7,000 a quintal in the domestic market. The reason for the falling prices is the estimated chilli production in 2006-07 at around 70 per cent more than what it was last year. The crop is expected to be normal and better than that of the last year, when the country witnessed a fall of almost 50 per cent at 1.3 crore bags (each of 45 kg). As the chilli market this year saw new highs, farmers returning to chilli cultivation could be a probable reason behind the surge in production estimates. Between January and November in 2006, the country exported 70,000 tonne as against 1,25,000 tonne during the same period in 2005. In 2007, the exports are expected to be around 1,25,000 tonne.

Domestic Edible Oil Industry Faces Raw Material Cruch

Indore: The Indian edible oil industry is facing raw material crunch after May 2007 owing to low kharif oilseed production and less-than-expected rabi output. If 2006 was characterised by good local oilseed harvest and adequate stocks with state-run and private agencies, the scenario is likely to be dismal in 2007. As per industry projections, the country is expected to produce 12.8 million tonne of oilseeds during 2006-07 kharif sowing season (June-October), down 6.5 per cent from last year. The prospects for rabi oilseeds is also not encouraging. Diminishing returns are driving the farmers away from oilseeds forcing them to shift to crops like wheat and pulses. As a result, oilseed acreage has shrunk, plunging the over $20 billion oilseed industry into a crisis. Because of low domestic production, industry players see India importing a record 6 million tonne of vegetable oils in 2007 to meet growing consumption. The biggest challenge to the edible oil industry in the coming year will be from diminishing output due to better returns from competing crops. India's total area under nine major oilseeds usually is 22-25 million hectares each year. However, due to shift in crops, the country's kharif groundnut production dropped to 3.6 million tonne in 2006-07 (Nov-Oct) oil year, from 4.4 million tonne a year ago. In the case of mustard, industry players said that India might produce around 500,000 tonne less mustard than previous year's industry estimated production of 7.2 million tonne.

Mustard Prices Up On Falling Stocks

The prices of mustard and mustard oil in the domestic market have gone up by 10-12 per cent since November on fall in crop output and a decline in stocks with the National Agricultural Cooperative Marketing Federation (Nafed). In Delhi, spot mustard price has jumped from Rs 1,625-1,850 per quintal to Rs 1,850-2,030 over the period. Consequently, price of mustard oil has also increased from Rs 4,300 a quintal to Rs 4,700. According to the ministry of agriculture, the area under rapeseed mustard has declined by more than 9 per cent in this rabi season. About 65.43 lakh hectare has been sown under rapeseed mustard, as on December 21, significantly lower than the 71.80 lakh hectare sown over the same period last year. Farmers in Rajasthan, Madhya Pradesh, etc have shifted from oilseeds to wheat and chana as they expect them to give better returns. In 2005-06, the country had a record mustard production at 78.87 lakh tonne against 76 lakh tonne in 2004-05. Currently, Nafed is left with only 13 lakh tonne of mustard.

Cumin Prices Fall On Profit-Booking

Cumin seeds prices continued to be volatile in the last two days due to anticipation of low output in February on the eve of new crop arrivals. The price of cumin seeds for February delivery closed at Rs 8,166 a quintal on December 27 on the MCX, down by 0.57 per cent from the previous day's close of Rs 8,213. The price of the near-month contract on the MCX too dropped by 0.45 per cent from Rs 8,062 on December 26 to Rs 8,025 on December 27. The fall in prices on December 27 is mainly attributed to profit-booking by traders. The sudden spurt in prices on December 26 is believed to have been triggered by the reports of a shortfall in the crop output as a result of fog in Saurashtra, which is set to hit the crop this year. Farmers are also anticipating rains in the region, which may result in a 20 per cent crop loss. This year, the country exported about 18,000 tonne of cumin seeds to Europe and the Middle East and exporters are hopeful of shipping another 2,000-3,000 tonne before the end of the financial year. But, next year, Shah projected less exports from the country owing to glut in supply from Turkey, Syria and Iran. Last year, Gujarat had produced about 60,000 tonne of jeera, while Rajasthan contributed 45,000 tonne to the country's total output of 135,000 tonne. With at least 30,000 tonne of carry-forward stocks this year and cultivation of excess cotton across Gujarat, the scenario for cumin seeds in the state has changed drastically this year. The world's consumption of cumin seeds - barring India - stands at 25,000-30,000 mt.

Not A Good Year For Sugar Industry

While the second half of the calendar year has not been good enough for the sugar industry on account of export ban and declining prices, the sugar industry may not see a better time next year as well. The prices will remain under pressure owing to bumper production (230 lakh tonne). The only hope is co-generation and ethanol. In 2006, the acreage of sugarcane in the country increased to 44.4 lakh hectare from 42.8 lakh hectare in 2005. More farmers turned to cane cultivation as a result of incentives, besides, a good cane price. The government is keen on taking the ethanol blending to 10 per cent by June 2007. If it is achieved, sugar mills will have an assured income. However, things are not very bright here. The 5 per cent blending is yet to take off nationally and has missed three deadlines. The profits and revenues of sugar companies over the next 3-4 quarters are expected to suffer. Balrampur Chini Mills and Dhampur Sugars recently announced declines in quarterly profits. Payments to farmers by the mills can also be delayed in the current season as a result of the softening sugar prices.

Import Duty Concession : Wheat

Private players have reported the import of 749,000 tonne wheat so far in the current financial year, according to the source. Despite the fact that the plant quarantine authority had originally given licences for import of over 3 million tonne wheat under OGL, actual imports have been very low due to high international prices. Of the total quantity imported under the OGL, almost all has reached Indian shores. The government had brought down the duty on wheat import under OGL to 5 per cent from 50 per cent in June to encourage private imports. In September, it further slashed the import duty on wheat to nil. The concession,which was valid till December 31 earlier, had now been extended to February 28. The official said there was a glut of wheat stocks at both Tuticorin and Chennai ports.