Soyameal exporters face the heat

Export enquiries for soyameal have been to drop ahead of the impending large soyabean harvest in South America, as buyers adopt a wait-and-watch mode.

Large harvests in Brazil and Argentina – estimated at 90 million tonnes and 50 million tonnes (mt) respectively are seen having a bearish impact on global prices, but domestic prices are largely seen holding on to their levels on lower market arrivals.

“There’s no significant buying happening now as future sale for meal is not taking place. Every buyer is waiting and watching to see where the market stabilises and is resorting to need-based buying,” said Rajesh Agarwal, Spokesperson and Coordinator for the Indore-based Soyabean Processors Association of India, the apex body for soya industry.

The Indian soyameal is already out-priced in the world market by upwards of $25 a tonne or above 5 per cent.

Factors such as lower market arrivals – with farmers holding back their produce mainly in the key producing States of Madhya Pradesh and Rajasthan amidst a lower-than-expected crop size – have driven up prices of soyabean in the country. High prices paid by Iran after it started sourcing primarily from India amidst sanctions by the West have also contributed to the rise in domestic prices.

High domestic prices of soyabean have taken a toll on soyameal processing. “Processing parity is poor and quite a few plants have shut down,” said Raju Choksi, Vice-President at Anil Nutrients Ltd, an exporter of soyameal, conceding that there was a slowdown in orders.

Against the estimated crop size of 12.2 mt by the industry, market arrivals, so far, have been a little over five mt, Agrawal said. “The arrivals this year so far, are approximately lower by about 15 per cent over corresponding period a year ago,” Agarwal said adding that majority of the processing units have been operating at negative margins all through the season due to high prices.

Excess rains in central India have shrunk the soyabean crop size this year and the industry has pegged it at 12.2 mt against the earlier projections of 12.9 mt. The Agriculture Ministry has pegged the soyabean crop higher at 14.67 mt.

Soyabean prices in the key market of Indore have been hovering around ₹3,900 levels for a quintal, a tenth more than early October. On NCDEX, contracts maturing on February 20 ended marginally lower at ₹3,854 a quintal.

In the first nine months of the current fiscal, 2.06 mt (1.91 mt) of soyameal have been exported. Iran is the largest buyer of Indian meal, which is also bought by Japan and Europe in large quantities due to the non-genetically modified character.