March 4, 2005

 

Indian exporters to promote rapeseed meal as soymeal prices remain high

 

 

A price rally in Chicago is proving to be an excellent opportunity for Indian exporters to promote their rapeseed meal instead.

 

World soybean prices are nudging six-month highs following erratic Brazilian weather while India is harvesting a bumper crop of rapeseed, prompting its biggest soymeal exporter and soybean processor to seek more Asian buyers for its rapeseed meal.

 

"If the current soy rally stays for some time, there is greater potential for more rapeseed meal to go out of India in much larger quantities," according to Dinesh Shahra, managing director of Ruchi Soya Industries Ltd on Thursday.

 

India sealed deals last month to export rapeseed meal to Indonesia at around $98 a tonne for March and April shipments. In contrast, Indian soymeal was last sold at around $252 a tonne, including cost and freight, in Southeast Asia.

 

India sold 499,075 tonnes of rapeseed meal to destinations in Southeast Asia in the 10 months through January. Shipments in the financial year ending March are likely to reach 1 million tonnes.

 

It is heading towards harvesting a rapeseed crop of about 7.02 million tonnes this summer, against just 6.7 million a year earlier. And rapeseed meal, whose prices stood at around $140 to $145 a tonne a year ago, is now offered at around $100.

 

"China may be a good market to sell our rapeseed meal. South Korea is also keen on our stuff," Shahra said, speaking on the sidelines of a palm conference in Kuala Lumpur.

 

Shahra said his firm had acquired two plants in Rajasthan to crush just rapeseed. "We also have plants in Madhya Pradesh which we can use for producing both soymeal and rapeseed meal. Now we are focusing on rapeseed meal."

 

SOYMEAL OUTLOOK BLEAK

 

"There is no chance Indian soymeal prices will fall now," Shahra said.

 

He said the sharp drop in Indian soymeal exports this year might be the start of a trend. His group of firms crushes about 7,000 tonnes of soybeans a day and accounts for about 30 per cent of the beans crushed in India.

 

"Soymeal exports will fall over the years unless the crop gets bigger or the government allows imported oilseeds to be crushed in India," Shahra added. "Domestic soymeal consumption is rising from the poultry sector. There is good economic growth."

 

Indian soymeal exports could fall below 2 million tonnes this marketing year, down from 3.4 million tonnes in the previous year.

 

"Earlier, we were expecting a 7.2-million-tonne soybean crop. Now, we are talking about 5.8 million tonnes."

Shahra said the government was studying ways to boost domestic oilseeds production, stagnant for the last 10 years.

 

"They are looking at ways of how to divert land for the oilseeds sector. The government knows that it cannot afford imports of edible oils in such large volumes."

 

India is the world's biggest edible oil importer. It imports more than two-fifths of its edible oil needs, and traders expect it to buy more than 4.5 million tonnes this year, compared with 4.4 million tonnes last year.