Dry weather in India is the main threat to the global oilseed supply and demand balance, Hamburg-based oilseeds analysts Oil World said July 14.

There was increasing evidence a lack of rain in India, Indonesia and Malaysia was due to the El Nino weather pattern although the impact was still difficult to assess, it said.

“A failure in Indian oilseed production would sharply raise the country’s import requirements of vegetable oils and export supplies of oilmeals,” Oil World said.

India had its driest June in 83 years, followed by subnormal rainfall in the first week of July, reducing water levels at its biggest reservoirs and disrupting sowing of key crops.

Some Indian oilseed production regions received less than 50 per cent of normal rainfall between June 1-July 7, delaying plantings of soybeans and other crops, Oil World said.

Indian output of soybeans and other crops could be “drastically reduced” unless weather improves, Oil World said.

But continuing drought in Argentina may help world soybean supplies as Argentine farmers turn from wheat to soybeans, it said.

“With wheat plantings down by more than 50 per cent from the normal level, there is more land which can be cultivated with soybeans later this year,” it said.

“We consider it possible that Argentine soybean plantings will reach a record of around 19.0 million hectares, taking place mainly in Oct/Dec 2009, up steeply from 17.5 million hectares last year and an average of 15.5 million hectares in the preceding five years.”

But successful Argentine soybean plantings would depend on rain by September, it said.