August 7, 2013

Taking nearly a third of supplies from India, Iran is set to emerge as the top buyer of Indian soymeal for a second straight year.

Iran stepped up soymeal purchases earlier this year because economic sanctions targeting its disputed nuclear programme hit soy imports from Argentina and Brazil, they said. Soys are crushed to produce vegetable oils and meal for animal feed.

Western sanctions do not cover food shipments but Iranian importers can struggle to obtain letters of credit to finance purchases or to get international money transfers.

India, Iran's second-largest buyer of crude oil, now pays Tehran only in rupees for its oil through an India-based account. In turn, Iranian importers pay Indian suppliers in rupees for food purchases.

Iran's requirement for non-genetically modified soymeal and freight advantages will also help Tehran become India's biggest buyer again, said B.V. Mehta, executive director of the Solvent Extractors' Association of India, an industry body with more than 850 members.

Soymeal shipments to Iran are expected to rise about 15% to one million tonnes in the year to March 2014 from the previous year, Mehta said. In the financial year to March 2013, Tehran was the top importer of Indian soymeal with purchases of 870,776 tonnes. Iran annually consumes 2.0-2.5 million tonnes.

India is currently exporting soymeal to Iran at around US$520-US$540/tonne, free on board, down from around US$620/tonne offered two months ago, traders said. India supplies soymeal in small parcels for clients in Tehran who need quick deliveries. Also, freight advantages over rival suppliers, especially from Argentina, give India an edge.

Indian exporters to Iran still complain of payment delays, with letters of credit taking around 1.5 months to obtain against a week normally. Meanwhile, soymeal export from India during July 2013 was 1.070 lakh (107,000) tonnes as compared to 1.683 lakh (168,300) tonnes in the same period of previous year showing a decrease of approximately 36.4%.

On a financial year basis, the export during April 2013 to July 2013 has been 5.183 lakh (518,300) tonnes as compared to 8.242 lakh (824,200) tonnes in the same period of previous year showing a decrease of approximately 37.1%. During current oil year, (October - September), total exports during October 2012 to July, 2013 are 31.152 lakh (3,115,200) tonnes as against 36.100 lakh (3,610,000) tonnes last year, showing a decrease of 13.7%.