Online BusinessUS, 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 soybean and rapeseed at lower prices. Exports are expected to come down by 15-20 lakh tonnes during 2009-10.
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Oilmeal exports rose 103.9 per cent and 28.5 per cent in September and October, respectively. However, these came down by 50 per cent and 44 per cent in November and December, respectively, compared to the same months last year. During April-December, oilmeal exports were 44 per cent 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 soybean and rapeseed, accounting for over 90 per cent of the total oilmeal trade, were the most hit, according to a report by Sharekhan Commodities.
“Prices have risen significantly because some of the big players are holding stocks and adequate quantity of seed is not available for crushing. The futures market is creating a havoc, which needs to be regulated. This year exports will reach a maximum of 35-40 lakh tonnes compared with 55 lakh tonnes last year,” said Ashok Sethia of Sethia Oil, and president, Solvent Extractors’ Association of India.
In a letter to Finance Minister Pranab Mukherjee, Commerce and Industry Minister Anand Sharma and Agriculture Minister Sharad Pawar, the Solvent Extractors’ Association has urged stringent regulation of futures trading to curb speculation.
The association has mentioned in the letter that since October there had been negative crushing margin mostly in soybean, rice bran and mustard due to higher prices in futures market coupled with less buyers in the physical market.
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 $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 Mehul Agrawal, research analyst (agri-commodities), Sharekhan.
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.
“India 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. 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 soybean 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,” Sinha said.