January 11, 2010

 

US, Brazil eat into Indian share of oilmeal exports

 

 

Oilmeal exports from India are falling due to higher prices and low quality compared to those from the US, Brazil and Argentina, which are offering better quality of soy and rapeseed at lower prices.

 

Exports are expected to come down by 15-20 lakh tonnes during 2009-10. Oilmeal exports rose 103.9% and 28.5% in September and October, respectively. However, these came down by 50% and 44% in November and December, respectively, compared to the same months last year.

 

During April-December, oilmeal exports were 44% lower at 22.86 lakh tonnes than 40.69 lakh tonnes in the corresponding period last year.

 

Oilmeals are imported mostly by Southeast Asian countries. Exports of soy and rapeseed, accounting for over 90% of the total oilmeal trade, were the most hit, according to a report by Sharekhan Commodities.

 

Solvent Extractors' Association (SEA) of India president Ashok Sethia said prices rose significantly as some of big players are holding stocks and adequate quantity of seed is not available for crushing.

 

Sethia also said the futures market is in need to be regulated, adding that exports this year will reach a maximum of 35-40 lakh tonnes compared with 55 lakh tonnes last year.

 

In a letter to Finance Minister Pranab Mukherjee, Commerce and Industry Minister Anand Sharma and Agriculture Minister Sharad Pawar, SEA has urged stringent regulation of futures trading to curb speculation.

 

The association has mentioned in the letter that there had been negative crushing margin mostly in soy due to higher prices in futures market coupled with fewer buyers in the physical market since October.

 

Domestic prices of oilmeals have increased due to lesser availability leading to a rise in prices of milk, eggs and poultry.

 

"The steep fall in exports was mainly due to higher prices of soymeal from India compared with those from other exporting countries such as the US. A crushing loss of US$20 per tonne has resulted in quite a few plants to close down. Also, we expect record crop in Brazil and Argentina during February-March. This would affect India's competitiveness in the Southeast Asian market," said Sharekhan research analyst Mehul Agrawal.

 

According to Anjani Sinha of the National Spot Exchange, there had been significant increase in exports of oilmeal from the US to Southeast Asia at the cost of Indian exports.

 

Sinha said the country has been losing out to the US, Brazil and Argentina in soymeal exports to Southeast Asian regions such as Japan and China. India has been traditionally exporting to Vietnam, Korea, Japan, Thailand and Indonesia.

 

He added that of late, Korea, Indonesia and Thailand have started importing from South American countries due to a perception of better quality of American soymeal and cost advantage.

 

"Holding back of soy by farmers in recent years is a new trend that impacts import commitments. Rising domestic consumption is another factor, which limits our ability to maintain export growth amid stagnant oilseed production," he said.