Maria Cappuccio 

The outcome of the UK vote, following the EU referendum held on June 23, to leave the EU, like the devaluation of China’s currency, twelve months earlier, not only took global financial markets by surprise but also many of the UK’s citizens, reflected in a considerable increase in uncertainty, within and outside the country, and expected to take a toll on confidence and investment. The pound has weakened despite some rebound and equity prices are lower in some sectors, especially for European banks. The International Monetary Fund (IMF) made a modest revision to the global growth forecast for 2016 and 2017, with related revisions mainly concentrated in advanced 

European economies, with impact muted elsewhere, including in the US and China. While the ‘Brexit’ decision is in the process of unfolding, the UK remains a member of the EU and pending further clarity on the exit process, the IMF forecast reflects a benign outcome, with less uncertainty going forward, expects arrangements between the EU and the UK will avoid a large increase in economic barriers, no major financial market disruption and limited political fallout from the referendum.

Global grain and oilseed markets are supported in 2016 by record-high harvests projected to rise to over 2.6bn/t with more than ample supplies of wheat, corn and soybeans. Low international prices and freights expected to strengthen demand for feed, food and industrial use. The UN’s Food and Agricultural Organization (FAO) Food Index fell in July, with cereal prices experiencing the largest monthly fall more than offsetting firmer dairy, meat and sugar prices. Bumper crops and weak demand have depressed food prices for the past few years, with the index hitting a seven-year low, before rebounding in the first half of this year on rallying grains and sugar markets, supported by adverse weather in South America and a weakening dollar, although agricultural commodity markets remain at low levels.

Global wheat production is forecast at a new record 743mt (million tonnes) in 2016/17, 8mt more than last year, reflecting a record crop in Russia as well as larger crops in Australia, Canada, Kazakhstan, Ukraine and the US, that more than offset the significant decline in the EU and smaller crop in Argentina. Coarse grain production is also expected to notch up a record 1,323mt (Corn 1028mt, barley 145mt sorghum 65mt) some 75mt more than last year, boosted by a record-high corn crop. The global oilseed crop is forecast higher at 544mt, mostly due to larger crops of soybeans 330mt, with larger crops of sunflower seed cottonseed, palm kernel, copra and groundnut, the exception being a smaller rapeseed crop.


Global supply of grains and oilseeds more than adequate to meet increased demand, projected to rise for grains by over 83mt to 2,066mt, with feed demand forecast by USDA to increase by 40mt to 938mt; oilseed crushing projected higher at 465mt with strong demand for feed use of oil-meals to rise by 10mt to 311mt. More than ample grain stocks are expected to increase by 22mt to 509mt by the end of 2016/17, this total includes China’s 218mt stock-pile of wheat and corn, representing nearly 44% of the global total.

Global wheat production is projected at a record high of 743mt, outpacing consumption for the fourth consecutive year. A record crop in Russia revised up to 70mt, with larger crops in the US 62mt, Canada 30mt and Australia 27mt, Kazakhstan 15mt, Ukraine 27mt, partially offset by a significant decline in the EU, where extensive rain during the summer months caused serious damage to crops especially in France; rain also affected output in Turkey. 

Excessive and damaging rains hampered Argentine wheat sowings — USDA forecasts a smaller output of 14mt with 8mt available for export. While the National Australia Bank (NAB) forecast the Australian wheat crop at almost 28mt, based on above average winter and early spring rainfall-the wetter than average conditions in NSW, more than offsetting a small downgrade in the West Australian crop; both the Australian Bureau of Agricultural and Resource Economics and Sciences (Abares), and USDA, peg the Australian crop below 26mt.


Overall increase in global wheat consumption expected to increase by 24mt to 733mt, with feed use forecast 11mt higher. The bulk of the increase in feed wheat use is expected to occur in the US and China with a smaller increase in Russia. In the EU, livestock producers are expected to have ample feed wheat to utilize this year as the EU crop continues to receive excessive rains, with French feed wheat prices sharply below French corn for much of 2016, suggest a projected increase over 3% in the EU’s feed wheat usage for the coming crop year.


Global trade for wheat at 170mt remains slightly below the previous year’s record. Larger imports are forecast for India, Turkey, South Korea, and Saudi-Arabia to support growing demand. With Russia poised to export a record 30mt of wheat for the first time this year, will bring the overall total for exports for Black Sea countries to 53mt (Russia 30mt, Ukraine15mt, Kazakhstan 8mt), larger exports are also expected for the US 26mt and Australia 19mt; with smaller exports from Argentina and the EU down by over 7mt to 27mt. Russia expected to grow market share to capture some of the trade usually undertaken by France with other EU exporters like Germany and the UK in contention.


Rising global wheat stocks overhanging the market saw prices plummet to seven-year lows in June, while subsequent downgrades to the quantity and quality of the French wheat crop increased volatility, and provided support to EU wheat and Black Sea values; contrasting with a drop in values in Chicago, the benchmark futures exchange, where the spot September contract pressured by large global supplies and news that Japan and Korea had both taken steps to restrict US wheat imports, due to the presence of unapproved GMO wheat, almost dropped to below $4/bu for the first time in a decade before closing at $4.01/bu (2 August).

The upward movement in Black Sea prices against a backdrop of ample supplies was enough to limit purchases by Egypt's General Authority for Supply Commodities (GASC) to only one cargo — 60,000/t of Russian wheat from Midgulf at $168.90/t plus $8.19/t freight. Wheat loading at Black Sea ports strengthened due to continued unfavourable outlook for crops in France and, to a lesser degree, Germany, according to Moscow-based consultant SovEcon, with Russian wheat quotes higher by $2.5/t to $167/t and Ukraine to $168/t, for wheat with a protein content of 12.5% on an FOB (free on board) basis. Lower US prices stimulated interest in wheat to North Africa and Brazil, providing import tariff restrictions are eased, saw CBOT September wheat contract close up at $4.224/bu ($155.21/t — 12 August). US Soft Red Winter Wheat FOB Gulf $182/t (11 August).


A bumper crop in the US, and better crops in India, EU, Ukraine, South Africa, Brazil and Argentina, are expected to drive global coarse grain output, projected to increase in 2016/17 to 1,323mt (Corn 1,028mt, barley 145mt sorghum 65mt) the largest coarse grain crop on record.

USDA forecasts coarse grain consumption to rise by 63mt to 1,312mt in 2016/17; feed demand is expected to rise by 29mt to 791mt with food and industry use up by 34mt to 528mt, with increases noted in several countries including the US, China, EU and Brazil driven by livestock demand. Global coarse grain trade is expected to fall by 6mt to 173mt, reduced imports into China down from 18mt to13mt for the major grains-corn, barley and sorghum and reduced imports into the EU down1mt to12mt. Despite lower trade this year the US is expected to take a greater share of the export market; global coarse grain stocks of 256mt are above last year, while key exporter crops are expected to rise to 78mt.


Global corn production is forecast at a new record 1,028mt in 2016/17, 68mt higher than last year. Larger US plantings on 94.1m/acres with harvest acreage at 86.6m/acres and record- high yields boosted the US corn crop forecast by USDA at a hefty 385mt; larger crops are also expected for Argentina 37mt, Brazil 80mt, the EU 62mt, Ukraine 26mt and Russia 14mt, while the South African corn crop has recovered following last year’s damaging drought; Brazil and Argentina are also expected to ramp-up corn plantings due to crop shortfall, tighter supplies and higher domestic prices this year.

Announcements by the Chinese government in March, to scrap China’s long-term support policy for corn, pressured domestic prices and led to lower plantings, which fell for the first time in six years, with a smaller crop forecast this year at 218mt. The policy originally intended to protect farmers’ income, by which the state purchased corn, at above-market prices, resulted in the accumulation of burdensome stocks, estimated by private analysts to be c.230–250mt, well above International Grains Council (IGC) and USDA estimates; even with a change in policy the problem of finding a home for them remains tricky, as age, quality and storage conditions, will determine use. Suggestions for disposal, apart from sales onto the domestic market, include turning the stocks into ethanol. While changes in the policy to reform the corn market, will take some time it will also impact on international markets. Rabobank forecast a significant slow- down for feed grain exports to China as domestic prices of corn decline and local corn consumption rises.

Take-up of corn, at this year’s state auctions in May were reported to be lack-lustre and disposal of ageing stocks to processors, implied poor quality. Recent reports (9 August) indicate that 13mt of corn has been sold since auctions began on May 27 according to data from the National Grain Trade Center compiled by Bloomberg. The government is expected to sell about 40mt of corn in 2016, including 20mt sold directly to the market earlier this year, according to Feng Lichen, chief analyst at Chicorn, a private consulting firm. On the Dalian Commodity Exchange, Corn contract January 2017, fell to Rmb 1,438/t ($216.32/t Aug 2) the lowest for the most-active contract since October 2006.

The US Department of Energy (DOE) projects 2016 ethanol production will average 980,000 barrels per day or 15.1bn/gallons. The agency also is projecting record ethanol consumption of 14.3 bn/gallons. USDA projects corn use for ethanol in 2016/17 at 5,275m/bu (134mt), producing over 15bn/gallons of ethanol and 40mt of livestock feed (36mt Distillers Dried Grains and Solubles (DDGS) 4mt Corn Glutenfeed/meal), with almost 7mt of DDGS exported to several countries.

The Renewable Fuels Association continues to urge US Environmental Protection Agency’s to rethink the proposed reduction to the 2017 Renewable Fuel Standard (RFS) from 15bn/gallons to 14.8bn/gallons, at a time when US corn stocks are forecast to rise to 61mt by the end of 2016/17 and corn prices to average $3.15/bu the lowest level in ten years. Large supplies and low prices highlight the economic challenges facing farmers and rural America, according to the President of the US National Grain Growers Association, as prices for a number of crops and livestock commodities are already below the cost of production.


Based on USDA’s current projections this year’s corn crop forecast at over 1,028mt, will only just cover current demand which is projected to rise by 58mt to 1,017mt, driven by feed, food and industrial use up by over 27mt and 31mt respectively. The bulk of the increase for feed expected to occur in the US 8mt, China 7mt and Brazil 2mt to support rising livestock demand, with US and global corn stocks expected to rise.

Global corn trade is 3mt lower at 134mt, driven by reduced imports into China, EU,Vietnam and South Korea, as they are expected to draw on larger supplies of competitively priced wheat for use in livestock rations at the expense of imported corn; feed use in Indonesia is forecast lower, with corn imports forecast to drop by 800,000/t to 2.2mt reflecting delays in issuance of licences and permits creating uncertainty for importers, the drop in corn imports expected to be partially offset by larger imports of feed-quality wheat. Larger corn imports are forecast for Mexico raised 500,000/t to 13.5mt on expected feed demand,Turkey 1.5mt, Zimbabwe 1.4mt and Venezuela up to 2.1mt. US corn exports, are projected higher this year at 55mt on reduced supplies and less competition from Brazil 20mt, with larger exports forecast for Argentina 24mt and Ukraine 17mt.

A smaller Brazilian safrinha crop highlighted the tight supply corn situation, where following a sustained period of weaker currency values, encouraged farmers to forward sell more of their corn than normal to overseas markets, leaving livestock (pig and poultry) producers struggling to source corn supplies. Brazil is forecast to import 1.1mt of corn including some imports from Argentina and Paraguay in a bid to cover the shortfall, while rising corn prices prompted government intervention. Agricultural Minister Blairo Maggi confirmed he was working for a solution, to lift import restrictions on genetically modified (GM) varieties of corn from September to November 2016; this would permit shipments from the US to take place, pending approval by the National Biosafety Technical Commission, an independent agency responsible for GMO approvals. A decision is expected by September 1.


Favourable crop ratings, enhanced the prospect of record corn supplies in the US, contributing to downward pressure on prices, quotes for US corn 3YC FOB Gulf fell $26/t to $167/t (Aug 12). By contrast, in South America, weather-induced damage to the Brazilian crop and harvest delays in Argentina saw higher prices- Argentine feed corn (up River) quoted at $181/t and Brazilian feed corn (Paranagua) $190/t (Aug 12); while Black Sea quotes are slightly lower at $198/t on tight nearby supplies. 


All meat products covered by the FAO Meat Price Index in July, saw prices firm, in particular pig meat, underpinned by limited availabilities — including a shortage of pigs for slaughter and lighter slaughter weights in the EU and reduced output of sheep and bovine meat in Oceania, caused by herd rebuilding. At the same time, international demand for meat remains firm, supported by a recovery in purchases by China, and sustained imports by several countries elsewhere in Asia.


FAO forecast that while production of beef 68.4mt and poultry meat 116.2mt are expected to expand, pig meat output is expected to fall to 116.4mt, smaller output in China due to a slowing economy and environmental regulations and in the EU low prices spur herd contraction, more than offsetting higher gains by the US, Brazil, and Russia. Increased exports and improved market access to increase Brazil’s production while moderate expansion in Russia due to lower prices. Overall global meat production is anticipated to rise by 0.3% to almost 321mt. Beef herd expansion in the US, India, and Brazil where production is expected to rebound, to offset lower production in Australia as producers rebuild herds. Increases in output are expected in the US, Brazil, the EU, India and Russia, while reduced production is foreseen for China,Australia and South Africa.


Global meat trade is expected to recover growing by 2.8% to 31mt in 2016. Trade in poultry meat is expected to reach almost 13mt — low international prices and rising domestic consumption stimulating import demand in a number of markets, including Saudi Arabia, South Africa, Japan,Vietnam, Cuba and the United Arab Emirates. Pig meat trade is expected to rise by over 4% to 7.5mt, supported by larger sales to Mexico, China, Russia, US, Japan, the Republic of Korea and Australia. While trade in beef meat is expected to rise by 1.3% to 9.3mt driven by growing demand in Asia, especially in China, Malaysia, Iran, the Republic of Korea and a limited recovery in Russia. The increase  in demand expected to be met by Brazil, the US, Mexico, Uruguay and Argentina. Restocking in Australia and New Zealand is expected to see trade in sheep meat fall by over 0.9mt, smaller supplies reducing imports into China, the main market.


Smaller crops in Turkey, Argentina and US mostly responsible for the cut in global barley production projected at 145mt, 3mt below last year. Rain has delayed the harvest in the key growing regions of France and UK, with EU spring crops faring better. Larger barley imports into Saudi Arabia,Turkey, Jordan, Syria, Tunisia and Morocco offset by smaller imports into China. Feed use at 100mt is almost the same as last year. Like other feed grains, barley values are lower than last year-Quotes for French feed barley FOB Rouen ($160/t – Aug 11); UK Feed Barley Merchant Nov 2016 £102-110/t ($134/t-$144/t – Aug 11).

Better crops in the Sudan, Ethiopia, Mexico and a number of other countries boosted sorghum output to over 65mt, 5mt up on last year, offsetting a large reduction in the US crop down by over 3mt to 12mt. The decline related to changes in China’s support policy for feed grains. In 2014/15 global exports to China peaked at over 10mt, this year sorghum imports are almost halved at 5.5mt. Even with the drop in China’s imports, global feed, food and industry use of sorghum is expected to increase by over 4mt to 65mt. Quotes for US sorghum-FOB Nola (Oct) have crept up over the week from $169.88/t to $175.88/t (Aug 11).


Despite the prospect of a record soybean harvest in 2016/17, with even larger crops expected for key producers, the US, Brazil and Argentina, adding to burgeoning supplies of food and feed grains, Chicago’s soybean (November) contract closed up at $9.966/bu ($366.19/t) Aug 15, strong growing demand for soybeans and South American crop shortfalls, providing support.

Oilseed production is forecast by USDA to rise to a record of 544mt in 2016/17, 25mt above last year’s harvest. Record crop for soybeans forecast at 330mt and better crops for sunflower 43mt, cottonseed 39mt, palm kernel 17mt, groundnut 41mt and copra 6mt; partially offset by lower rape crop 67mt, due to smaller crops in China and in the EU, where a lower planted area and persistent rain reduced output. Global crush is forecast at a record level of 465mt driven by soybean demand with greater uptake of oil meals projected to rise by 10mt to 311mt, reflecting rising protein demand mostly in China and in some other countries.

Drew Burke, Bunge's chief financial officer, forecast a diverging soybean crush environment.With forward oilseed processing and grain handling margins in North America and the Black Sea being solid, reflecting big harvests and strong demand, while noting that smaller than expected crops in Brazil and Argentina are slowing farmer selling, which will damage processing margins. While margins for Canadian canola and European sunflower seed are attractive, European rapeseed crush margins remain depressed due to excess industry capacity and weak biodiesel demand.

Global trade in oilseeds is forecast to increase by 2mt to 159mt with ample oilseed stocks expected to end the year slightly lower at 81mt; this includes lower soybean stocks of 71mt with tighter stocks for rapeseed 3.9mt sunflower seed 1.5mt.

Record sunflower seed production is expected to rise to over 43mt, an increase of almost 4mt from the current year. The bulk 

of the growth is projected in Ukraine and Russia, which accounts for 54% of global production.
Record supplies, especially in both Ukraine and Russia, are expected to sharply raise global crush, boosting meal production, a record at 17.8mt primarily used to substitute for reduced rape meal in EU animal feed, with global consumption forecast to rise by 8%; and record oil production 16.6mt with strong demand in the EU, India, the Middle East and North Africa expected to lift global consumption by 4%;

Larger soybean crops forecast for the US111mt, Brazil 103mt and Argentina 57mt are expected to lift output to 330mt in 2016/17. Planting progress for the US soy crop in May was faster than the prior five-year average, allowing the plants to take advantage of favourable conditions in June and July, raising crop ratings, while rain in August is essential for the plants to reach full yield potential.

With a large crop in the making, prospects for US soybean exports have brightened considerably since the start of the year. Weather hindered crops in South America, hot, dry weather in Brazil and flooding in Argentina, prompting a significant rise in prices there; buyers switched to US soybean supplies leading to record export sales from May through August revised up to 51mt, leading to a smaller US carryout. Because of the supply problems in South America, the US is expected to be the main source for soybeans from August through to February 2017, with exports forecast to increase to 53mt beans and 11mt meal in 2016/17, with soybean stocks just below 9mt by the end of the season. South American exports are expected to rise with exports from Brazil 60mt beans and 16mt meal;Argentina under 11mt beans and 33mt meal.


China’s demand for meat continues to grow, as a growing middle class consumes more meat. Higher demand for industry feed and protein meal as a result of a recovery in swine production and steady growth in the poultry sector is forecast with imports of soybeans expected to rise to 87mt this year. 

India’s oilseeds prospects improve with normal monsoon after two years of drought 

India remains the world’s second-largest consumer of edible oils at close to 21mt (million tonnes) next only to China where the market is around 35mt, writes Kunal Bose. This is despite the per capita disappearance of oils and fats in India which, at 16.7kg, trails the world average of 27.6kg and China’s 26kg. The cumulative use of oils in India, which is the fastest growing among the world’s major economies is hugely big because of its over 1.25bn population. Dr BV Mehta, director general of Solvent Extractors Association of India (SEAI), says the country will need an extra 1mt of oils every year to meet its growing requirements. From a health point of view, the oils demand growth is a welcome development. But what niggles the government is that while domestic production of nine major oilseeds during the summer and winter harvests has remained within a narrow band yielding oils of 6mt to 7.25mt, the country has become increasingly dependent on imports.

India’s edible oils imports rose to 15.103mt in 2015 from 12.188mt in the previous year. Such a sharp rise in imports resulted from the toll that two consecutive years of drought took on Indian oilseeds crops. The trade estimates that India’s oilseeds production was down 18.63% from 33.679mt in 2014/15 to 31.816mt in 2015/16. The one that suffered the most was soybean seeds where production was down 12.90% from 8.5mt to 7.21mt. But SEAI puts 2015/16 soybean production higher at 7.75mt. However, the rape/mustard/toria crop could make gains of 8.40% to 5.92mt from 5.08mt. After two years of the earth being scorched by serious rains deficit in many parts of the country, the country is having more than a normal south-west monsoon this year improving the prospects of all crops, including oilseeds.

According to one trade estimate, soybean this time is planted on larger area of 11.27m hectares up from 11.4m hectares in 2015/16 and the crop is found to be in either normal, good or very condition in almost all growing centres. Similarly, farmers are growing groundnut and sunflower on bigger areas this season. Prospects of a good soybean crop in the current season on the back of 2015/16 drought-related setback in production are a good development for India. This is because soy oil finding increasing favour with the Indians now has a share of 20.28% in the country’s oils consumption basket. Any price fall in soybean is always a fillip to higher consumption of this oil.

According to the US Department of Agriculture (USDA) report of August, the global oilseeds production for 2016/17 is projected at 543.5mt, up 7mt from the month earlier in which the share of soybean is placed at a record 330.4mt. The report says:“The US production increase is partly offset by reductions for both India and Ukraine with the latest planting data for both countries indicating lower forecasts for harvested area.” The Indian part of the report will call for revision as both soya acreage and production outlook look encouraging. Confirmation of this comes from government agencies and SEAI. The US oilseeds production for 2016/17 is projected by the agency at 120.2mt, up 4.8mt from July due to a higher soybean production forecast. Soybean output for the current season is forecast at 4,060 million bushels (one bushel equals 27.2155kg), up 180m due to yield improvement. The US harvested area remains unchanged at July forecast level of 83m acres.

The US soybean crop benefits from yield forecast of 48.9 bushels per acre which is 0.9 bushels above last year’s record. Whatever the size of the US and Indian crops, two developments will have a bearing on soybean prices. First, in a presentation a few months ago, the world-renowned oilseeds expert Dorab E. Mistry said the lack of carryover bean stocks in Argentina was now in the open.“Thus far we had been led to 

believe that Argentine farmers were holding back large tonnages of old crop beans. Today we find those stocks are much lower — possibly non-existent,”
he said. The USDA agreed and “slashed the 2016/17 carryover to just 300m bushels.” 
Secondly, earlier this year rains pounded hard enough the soybean growing centres in Argentina such as Cordoba, Entre Rios, Santa Fe and Buenos Aires, leading experts to lower crop estimate by 6mt to 55mt. Rains have muddied the roads and fields so much that farmers could bring combine harvesters to the field causing damage to growing areas.Along with Brazil and the US,Argentina is one of the world’s leading exporters of soybeans, soy oil and soy meal.

In the meantime, a report says that Brazil’s till recent insatiable appetite for growing soybeans in increasingly big quantities appears to be fading. Chicago-based commodities consultancy AGR Brasil says the estimated 2% rise in land under soybeans to 83.5 acres during 2016/17. This is seen by many as the smallest in soybean acreage rise in Brazil in the past decade. What is not to be lost sight of is farmers’ juggling of land space between corn and soybean depending on price expectation. The world has seen major disappearances of oilseeds, principally soybeans since 2012/13. China being a strong importer of soybeans year after year remains a factor in oilseeds disappearances. Mistry raises an important point:“We are fortunate that world production has also been rising at a dramatic pace. However, as I have repeatedly pointed out, we have enjoyed five back-to-back bumper bean harvests... But what happens when this sweet music stops?”

The Hamburg based magazine Oil World says the major bullish factor for oils and fats is to be found in substantial reduction in world stocks by 4.2mt in the first eight months of 2016. Continuing, it says while the recent price rise was led by palm oil, most vegetable oils have reversed the declining trend. Palm oil is the price leader which appreciated by US$ 130–140 a tonne or by 21% to 23% in the three weeks to 18 August. Also lauric oils rebounded with palm kernel oil up 12% and coconut oil 10% during this period. Soya oil was also pulled higher with Argentine prices up US$ 90-100 a tonne and US export prices were up US$110–120 a tonne. The demand for oils would have been higher but for the generally weaker world economy and shortages of petrodollar in big palm oil and vegetable oil markets such as West Asia, north and west Africa.

What also acted as some check on oil prices moving forward was China’s active auctioning of oil from the state reserve of old rape oil vintage 2011 mainly and also 2012. This is a common Chinese practice with almost all commodities: build inventories when prices are low and then unload when the market favours to book profits. Indonesia and Malaysia also have to reckon with rising subsidy bill to support production of biodiesel caused by low petrol prices. Mistry’s revised estimate for Malaysian palm 

oil production in 2016 is between 18.4m and 18.8mt. The reason for giving a “fairly broad range,” as he explains, is because of the proportion of young new hybrid palms in the south-east Asian country is increasing and “we don’t have enough reliable data on how well they perform.” At the same time, it is claimed that hybrid palms are highly drought resistant and recover from dryness quickly. The upper end of Mistry forecast will come good if during September to November, Malysia makes 2mt each month.

Mistry thinks the combination of mature area and impact of new young palms will limit the shortfall to 1mt. But he is also aware that a leading Indonesian producer is sticking to a 2mt shortfall. If that happens that will be a positive for palm oil prices. What about palm oil outlook for 2017? According to Oil World, production in Malaysia and Indonesia will still be partly curbed by the lagged effect of the previous El Nin~o, keeping yields below potential in 2017. According to the magazine, the number of fruit bunches available for harvest will still be less than normally. However, with improved rainfall, oil palms will be regaining strength and the bunch weights should be considerably higher than in 2016. A recovery in yields (though still staying below 2015 and 2014) and further growth in the mature area are likely to boost Malaysian and Indonesian palm oil production to new record highs.

In the hope that duty difference between crude oils and refined oils will be big enough to allow profitable working of refineries, Indian groups went on building refining capacity close to ports. But since New Delhi in its wisdom has kept the difference in import duties between crude and refined oils at only 7.5% instead of 15% pleaded by the local industry, the refineries in India are using 40% to 50% of their capacity. The difference in landed cost of crude palm oil and refined, bleached and deodorized palmolein should ideally be around $50 a tonne. That alone will lead to better use of the local refining capacity. India, the world’s largest user of palm oil, imported 9.496mt in 2015 compared with 7.931mt in the previous year. If major part of this oil comes in crude form then that will prove to be a blessing for the Indian refining industry. The highly rewarding Chinese experience has encouraged Dr Mehta to intercede with New Delhi for reduction of import duty on oilseeds from 30% to10%, if not 5% in order to encourage imports of high oil content oilseeds such as rape and sunflower seeds. India is in

such big deficit in local oilseeds supply that imports will not in

any way compromise the interest of local farmers.