Surabhi Globals-Export/Import

India is outpacing China in export growth of locally made retail and lifestyle products, according to Damco, the world’s seventh largest freight forwarder.

Crude palm oil futures prices have recently fallen below the psychological level of Malaysian Ringgit 3,000 a tonne.

Sharper declines are expected from April with prices most likely to hurtle towards MR 2,400 in the months ahead. This follows strong and widespread expectations this year of a significant rebound in global vegetable oil production, including crude palm oil, combined with concerns over weak demand in major consuming markets as also a strong dollar and contained rise in crude mineral oil rates.

Indeed, indications are that the peak palm oil production season, which usually starts from April, may advance to March this year as trees recover from the adverse effects of El Nino in 2015-16.

Indeed, as usual, there will be attempts to keep the mood buoyant during the upcoming price outlook conference in Kuala Lumpur; but the props will eventually give way to market fundamentals that are loaded against marked price gains.

Expansion projection

Palm oil production is forecast to expand by close to six million tonnes in 2016-17 with both Indonesia (35 million tonnel ) and Malaysia (20 million tonne ) recovering from previous year’s adverse weather effects.

Other origins, minor though, would contribute about 9 million tonnes. Overall demand (food, fuel and industrial) is projected to trail production, with major importing countries China and India already registering a slowdown in imports. For instance, India’s palm oil imports were lower in January.

A rebound in India’s oilseeds harvest (soybean in kharif season and rapeseed in rabi) is helping raise domestic vegetable oil production and has already sent local prices hurtling down. Indeed, if the Indian government hikes customs duty on imports (a likely prospect), it could weigh more heavily on palm oil prices.

India’s basmati exports to the European Union (EU) could be significantly hit if the bloc implements a proposal to bring down the tolerance level for tricyclazole, a chemical used in India to treat rice.

New Delhi is trying to convince the EU not to go ahead with the “unnecessary” safety precaution, as it argues that it has been scientifically proved that present levels do not pose a threat to consumers, a government official said.

“The EU plans to bring down the MRL (Maximum Residue Limit) for tricyclazole to the default level of 0.01 ppm (parts per million), which could prove to be disastrous for Indian exports of basmati.

But it is supposed to happen only in 2018, so we have time to convince them not to implement the change,” the official told BusinessLine .

EU initiative

India is in talks separately with European countries, such as Italy and Portugal, which do not support the EU initiative of raising the tolerance limit to put pressure on the bloc not to go ahead with its plan, the official added.

The MRL for tricyclazole, a fungicide used by rice-growing countries to protect the crop from a disease called ‘blast’, is at present fixed at 1 ppm by the EU.

This level does not prove to be a problem for Indian exports at the moment, as levels detected in Indian basmati consignments are much lower.

The International Cotton Advisory Committee (ICAC) has projected that India’s cotton exports will grow 3 per cent to 990,000 tonnes in the current year, with production likely to rise by 2 per cent to 5.9 million tonnes.

World cotton trade is estimated to expand by 3 per cent to 8 million tonnes in 2017-18, with China’s import volume set to grow by 11 per cent to 1.1 million tonnes for the year. ICAC cites the growth in China’s imports to its surging mill use, which continues to outpace its production.

Import demand

Bangladesh’s imports are projected to rise by 3 per cent to 1.5 million tonnes in 2017-18, while Vietnam’s imports are forecast to increase by 7 per cent to 1.24 million tonnes.

The United States will remain the world’s largest exporter with its volumes rising by 5 per cent to 2.9 million tonnes in 2017-18, while India’s exports are projected to grow by 3 per cent.

Futures firm

In the international market, cotton futures remained firm at 77.86 cents for a pound for ICE May Futures.

In its latest statement, the international body said global cotton production is forecast to grow by 23.1 million tonnes on a planted area of 30.4 million hectares in 2017-18.

While projecting India’s output at 5.9 million tonnes, ICAC also noted that India’s cotton area has expanded by 7 per cent to 11.2 million hectares.