Agri Business

Weak rupee, rise in area to pep up soyameal, rice exports

Vishwanath Kulkarni Ahmedabad/Bengaluru | Updated on August 31, 2018

The weakening trend in rupee coupled with increase in kharif acreage has brightened the export prospects for agri-commodities such as soyameal, maize and non-basmati rice among others.

The rupee, which has weakened by over 11 per cent since early January from a level of 63.66 against the dollar to a low of 71 on Friday, is seen enhancing the export competitiveness of these commodities.

Exporters have already started reworking their quotes by factoring-in on the gain from currency depreciation. While the soyameal prices have seen a correction of around 10 per cent, the rice exporters have lowered their quotes by around 2-3 per cent. Supported by multiple factors including export incentives, prospective Chinese market and buying from Japan as well as South-East Asian and Far East nations, India’s soyameal exports are set to surge in the current financial year.

The soyameal prices have already dropped by more than 10 per cent in past one month from $433 a tonne in July to about $385 in August. The reduction in prices is also a reflection of the optimism that followed from the increased acreage and good condition of the crop.

“We expect a good crop as climate has been conducive with widespread rains and intermittent sunny days that is suitable for the crop. Total acreage has gone up to 110-112 lakh hectares. What is to be seen is the September rains and monsoon withdrawal. Harvest will begin from second half of September. In Madhya Pradesh and Maharashtra, we have seen sowing of the shorter duration variety of soyabean cultivation. There doesn’t seem any visible losses or damage at present and crop condition is good,” said Davish Jain, Chairman, Soybean Processors Association of India (SOPA).

China-US stand-off

According to Jain, the US-China trade war will only be able to benefit India provided the quarantine restriction by China on Indian imports are lifted. “This will open a big opportunity for soyameal exports to China, which is buying from Brazil currently. Up to October, Chinese are covered with Brazilian soyameal. But if the trade stand-off continues beyond October, there is an opportunity for India to step-in for supplies,” said Jain adding that efforts are being made at the highest level in the government to take up the diplomatic route to clear exports to China.

According to a research report by Kedia Stock & Commodities, following government boost for soyameal exports with 10 per cent incentives of the free-on-board value from the current 7 per cent till March 31. “Soyameal exports in August are expected to double on year to over 100,000 tonne due to robust demand from European countries. India’s soyabean output is set to jump by about 20 per cent to over 10 million tonnes in the 2018-19 crop year that starts in October,” it said.

For non-basmati rice, especially the par-boiled variety, export quotes have been lowered by 2-3 per cent for the African and West Asian markets to about $390 per tonne from $400 earlier. “We have revised our quotes as the currencies of our buyers, mainly in Africa, have also weakened against the dollar,” said BV Krishna Rao, President of The Rice Exporters Association. South Africa is a major buyer of India’s par-boiled rice.

Published on August 31, 2018

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