NIWAI, India, April 5 (Reuters) - India has harvested a record rapeseed-mustard crop, but crushing could lose momentum in the coming months as many farmers are holding back from selling to oilseed processors in the hope prices will rally further.
Slow farmer selling, coupled with falling supplies of sunflower oil from Ukraine, could force the world's biggest importer of edible oils to increase overseas buying of palm oil and soyoil , despite the record rapeseed crop.
"In the past two years prices rose after I sold crop to traders immediately after the harvesting. This year, I have decided to wait for a few months," said Ramras Chowdhary, a farmer in Niwai in the northwestern state of Rajasthan.
Rapeseed prices were below 6,000 rupees per 100 kg in March 2021 when farmers started selling the last crop, but jumped to a record 8,813 rupees in September.
The rally prompted farmers to allocate more land to rapeseed when they started planting winter-sown crops in November.
That, and sufficient soil moisture, has lifted India's rapeseed production to a record 11 million tonnes, up 28% from a year ago, says Anil Chatar, a trader based in Jaipur, Rajasthan.
"Crop is far more than the last year, but crushing won't pick up unless farmers sell their harvest," Chatar said.
Usually farmers flood the market in March and April, but this year supplies are lower than normal, says trader Varun Khandelwal.
"It seems farmers will sell the crop in tranches throughout the year," Khandelwal said.
In March, oil mills crushed 1.6 million tonnes of rapeseed, but the pace could moderate in the coming months as supplies have fallen in recent days, said Govindbhai Patel, managing director of trading firm G.G. Patel & Nikhil Research Co.
The rally in prices of other edible oils, and likely drop in sunflower oil imports because of the Ukraine war, has boosted demand for rapeseed oil, Patel said.
More than 90% of India's imported sunflower oil usually comes from Ukraine and Russia. India imports palm oil mainly from Indonesia and Malaysia, and soyoil from Argentina and Brazil.
Six months ago, rapeseed oil was available at a premium of 35% over soyoil, sunflower and palm oil, but it is now trading at par with other edible oils, according to data compiled by the Solvent Extractors' Association of India.
India will need to import more than one million tonnes of vegetable oils every month as rapeseed oil supplies will remain limited despite the record crop, predicted a Mumbai-based dealer with a global trading firm, who declined to be named.
Reporting by Rajendra Jadhav Editing by Mark Potter