High prices may leave India out of soyameal market

As the new soyabean crop hits the markets of Madhya Pradesh, the largest-producing State, export prospects for domestic soyameal continues to remain bleak as it stands outpriced in the global market.

Bean arrivals in various markets of MP were estimated at around 20,000-25,000 bags on Monday and price of the new bean is hovering around ₹3,000 per quintal, while the old crop is being sold at around ₹3,200 per quintal.

Looking at the trend, the crushing industry has to depend only on the domestic market, in the absence of any overseas demand, said Rajesh Agarwal, Chairman and Managing Director of Giridharilal Sugar and Allied Industries. Normally around this time, the exporters’ order book would have transactions of at least four to five lakh tonnes. DN Pathak, Executive Director, Soybean Processors’ Association of India (SOPA), said the only reason why there were no export orders was because “we are not competitive enough in Argentina and Brazil. Why should anyone pay $100 per tonne more for Indian meal?”

“The last two months (July and August) are not a good gauge because it’s slack season anyway. The season begins in October, this year it’s a bit early. That said, the situation is unlikely to improve because we are out priced by competitors. We have a unique selling proposition of being non-GM (genetically modified). But for that we can command a $15-25/tonne premium at best, no one will pay $100 more,” Pathak added.

While the new crop has hit the markets, there’s considerable amount of old stocks which is also entering the markets, sources said. “The export prospects don’t look good. It is going to be a repetition of last year,” said Raju Choksi, Vice-President of Anil Nutrients Ltd, an exporter. Choksi said the trade had borne the brunt of high domestic bean prices last year. As a result, neither the trade nor the crushers or exporters are taking any positions now. They will wait for the arrivals to pick up and how the prices move, he added. BV Mehta, Executive Director, Solvent Extractors’ Association of India, said the price difference between India and Argentina and Brazil is above $100-120 per tonne and at these rates it’s difficult to see exports increasing.

“The meal is not supporting crushing, nor is the bean price, which although has come down, there’s still a disparity in the processing of the bean. That’s hurting the industry with capacity-utilisation at its lowest. Either edible oil prices have to go up or bean prices come down for processing to be viable,” Mehta added. SOPA’s Pathak further explained that farmers in Argentina sells their soyabean at $300 a tonne; Indian farmers sell their bean at $500 a tonne. “Productivity in Argentina is roughly three times ours. This means that an Indian farmer gets $500 per hectare, but the Argentinian farmer, even if yield is 2.5 times more, gets $750 per hectare. We have to increase our productivity by at least 1.5 times but no one is looking at that,” he said.

Currently, the soyabean prices ranges between ₹30,000-32,000/tonne and has caused a disparity since oil prices have fallen. The realisation from oil sales, which used to be 50 per cent, have come down to 30 per cent.

Soyabean meal exports dropped sharply to 768 tonnes in August, compared to 2,778 tonnes during the same period last year. As of September 11, soyabean has been sown across 11.62 million hectares (mha), up 5.5 per cent from the same time last year when acreage stood at 11.01 mha.

Production fell to 10.5 million tonnes (mt) in 2014-15 from 11.86 mt the year before. It is estimated that production will remain about the same as last year in 2015-16.

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