Chennai, Jan. 22 Solvent extracting units face a tough period ahead with soyameal exports dropping over 50 per cent in the first nine months of this fiscal.
According to the Solvent Extractors Association of India, 14.90 lakh tonnes (lt) of soyameal were exported in April-December against 30.56 lt during the same period, a year ago.
Lack of demand
“Soyameal exports have dropped due to a variety of reasons, including lack of demand and the rise of the rupee against the dollar,” Mr Rajesh Agrawal, spokesperson of the Soyabean Processors Association of India, said.
“At the beginning of the season, 10 lt were contracted for delivery between October and December. After that, only a few quantities have been traded. These have been in small quantities to be shipped in containers,” Mr Davish Jain, President, Central Organisation for Oil Industry and Trade, said.
Higher quotes
Though 10 lt of soyameal were contracted for exports at the beginning of the oil year in November, the shipments have been hit by higher quotes.
Exporters had to quote higher prices as soyabean ruled higher, making it tough for them to find parity. On Friday, soyabean quoted at Rs 21,000 a tonne. This is lower than Rs 23,000 quoted since the start of the season.
“While bean prices have dropped, there has been a corresponding decline in meal and oil prices,” Mr Jain said.
Soyameal prices are currently quoting at Rs 18,200 a tonne against Rs 18,800 during the October-December period.
“There has been a $40 a tonne drop in prices from the peak we witnessed earlier,” Mr Jain said.
Last fiscal, soyameal exports were at a record 41.77 lt. “Last year, we reaped the benefits of lower crop in the United States and the farmers strike in Argentina. We are unlikely to witness the same situation this year,” an exporter said. “Reports of higher crop in Brazil and Argentina are putting pressure on bean and meal prices,” Mr Agrawal said.
Global supplies
“Global soyabean supplies are expected to be 30-40 million tonnes higher this year. When production is likely to be 15 per cent higher, it is difficult to absorb it without price cut,” Mr Jain said. The rupee has also increased to 46.14 against the dollar now from 47.80 at the beginning of November. A higher rupee value means the prices will go up, making exports uncompetitive.
“This season has not been a good one for us. Only 50 per cent of the normal bean crushing has been completed,” Mr Jain said.
A factor that has helped the solvent units to some extent is domestic consumption. At least 3 lt has been consumed by the domestic poultry and feed sector.
“Some of this has found its way to the neighbouring countries through the land route,” Mr Jain said.
Salvation lies in contracting at least 5 lt of soyameal for exports in the next two months. “It will really help the industry to stabilise,” Mr Jain said. Things are expected to get tough from March onwards when Brazil's harvest will hit the market. Argentina's crop will arrive in April to add to the pressure on the market.
This year, soyabean production in Brazil is projected at 65 million tonnes against 63.7 million tonnes last year. Argentina's output is forecast at 51 million tonnes (48 million tonnes).
INSIGNIFICANT BUYER
China, one of the key buyers of late, has been an insignificant buyer this year. “They have not been asking for meal. Their growers themselves are under pressure as China is buying from North and South America,” Mr Jain said.
Soyabean production this year is projected at over 97.21 lt against a record 108.21 lt last year, according to Soyabean Processors Association of India's estimates.
Source : Business Line