Commodities

Costlier seeds, smaller crop blunt oilmeal export outlook

Rutam Vora Ahmedabad | Updated on December 06, 2019 Published on December 06, 2019

Provisional data released by the Solvent Extractors’ Association of India on Friday showed oilmeal exports in November plunged 64 per cent to 126,128 tonnes   -  Kutredrig

SEA data reveals November exports down 64% year-on-year

Export of oilmeals has taken a sharp hit on costlier domestic meal prices and lack of export incentives. Experts see Indian oilmeal losing its conventional markets in South-East Asia and neighbouring nations due to higher prices.

The latest provisional data released by the Solvent Extractors’ Association of India (SEA) on Friday stated that oilmeal exports in November 2019 dipped a staggering 64 per cent to 126,128 tonnes from 353,405 tonnes in the same month last year.

The overall export of oilmeals during the April-November period is reported to be 1,652,599 tonnes, down 21 per cent from the 2,086,321 tonnes exported in the same period last year.

The blame for this sharp decline has been placed on the 35 per cent increase in the Minimum Support Price (MSP) for soybean over the past three years. Soymeal has a 25-30 per cent share in the country’s overall oilmeal exports.

This has reflected on meal prices, as Soyabean meal has shot up by $84 per tonne over the past year from $365 a tonne FOB Indian ports in November 2018 to $449 last month.

The currency exchange rate didn't move much during this period.

Davish Jain, Chairman, The Soybean Processors Association of India, (SOPA) stated that Indian soymeal is no longer competitive enough to cater to regular markets at the current price levels.

“The continuous rise in MSP by more than 35 per cent in three years has led to higher seed prices. Also, this year there has been a lot of loss in standing crop due to incessant rains and a prolonged monsoon, even up to November. In the absence of our price parity for exports, no major contracts were undertaken in the beginning of the season. We will have to prune our export targets,” he said.

Jain believes that soyameal exports may fall as compared to previous years and may not even touch one million tonnes this year.

The SEA also noted that the drop in exports is due to non-competitiveness in international markets. “This is mainly due to disparity in export of oilmeals, specifically soyabean meal due to higher MSP of beans, which makes the domestic soyabean meal expensive in the international market compared to other origins,” said BV Mehta, Executive Director, SEA.

However, lack of export incentives is also hurting the interests of exporters. “We had pleaded with the government to continue the export support. But from August 1, 2019 no MEIS entitlements have been released by the government. There is a total blockage of funds of the exporter fraternity. This assistance was to the tune of 7 per cent, which was brought down from the earlier 10 per cent,” Jain said.

“We have been asking for support to be raised to 15 per cent so we can stay competitive in the export market,” he added.

SEA data revealed that there has been a sharp year-on-year decline in imports of Indian oilmeals in the April-November period by key countries, including Iran (-61%), Vietnam (-45%), Thailand (-22%) and Taiwan (-6%). However, there was growth of 20 per cent in oilmeal imports by South Korea.

Published on December 06, 2019
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