El Nino may impact oilseeds production this year

KOLKATA: Imports of vegetable oil and oilseeds are likely to surge if El Nino effect develops this year as forecast. El Nino, or warming of Pacific Ocean, led to deficient rainfall during the monsoon season and impacted production of oilseeds on all three occasions when it struck over the past decade.

El Nino adversely affects rainfall and leads to drier conditions in India, South East Asia and eastern Australia, while it causes wetter conditions in South America and southern USA.

Production of four major rainfed oilseeds – groundnut, soybean, sesame and castor – is susceptible to El Nino since even minor variation in rainfall impacts arability of these crops. With production likely to be impacted, oilmeal exports may also get affected this year.

"If rainfall this year is lower than 90 per cent of long-range forecast, these crops are likely to be affected adversely. However, distribution and regular spells have a greater bearing on oilseed crops than the absolute quantum of rainfall.

The demand-supply mismatch during peak season could also bring in unwanted volatility in prices of these oilseeds across major markets," said Raju Choksi, vice-president (agri-commodities), Anil Nutrients Ltd.

Choksi added that in case a major El Nino develops, oilseed production in India and palm oil production in Malaysia and Indonesia would take a hit. However, wetter conditions in South America and the USA may prove beneficial to the soybean crops in these regions.

As per data available from the Indian Meteorological Department, India faced severe drought in 2004 and 2009, when monsoon was below normal by 13 per cent and 22 per cent respectively. Production of oilseeds went down in both these years, as did oilmeal exports, while vegetable oil imports surged.