India soymeal exports to hit 10-yr low as Iran trims purchases
The sanctions had forced India to trim oil purchases from Iran, but it remained a loyal and large customer
India's soymeal exports are likely to fall by a fifth to their lowest in a decade at 2 million tonnes in the marketing year that starts in October, with top buyer Iran turning to South American sellers of the animal feed, a senior industry official said.
Iran has been stepping up purchases from Brazil and Argentina after trade sanctions over Tehran's disputed nuclear program were eased in late 2013, said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd, India's biggest soybean processor.
"This year we will end up with 2.5 million tonnes of exports, but next year we could be in the doldrums," Shahra told Reuters ahead of an edible oil industry conference in Mumbai.
A landmark deal struck in Nov. 2013 eased some of the sanctions on trade with Iran that had slashed the OPEC member's oil exports and narrowed its options for securing food and agricultural goods to just a few countries.
The sanctions had forced India to trim oil purchases from Iran, but it remained a loyal and large customer. In 2012 as sanctions stalled dollar payments, it started settling part of its oil debt in rupees and Iran was using those to buy goods from India.
That rupee-trade gave India an edge over other soymeal suppliers such as Argentina and Brazil, quickly allowing the South Asian country to establish a near-monopoly in exports.
India is likely to export 200,000-300,000 tonnes of soymeal to Iran in 2013/14, Shahra said, compared to 623,173 tonnes inthe current year ending Sept. 30.
Iran's difficulties in securing soymeal from other producers due to the sanctions had also prompted Indian exporters to seek hefty premiums over global prices, sometimes as high as 20 percent.
But those premiums have vanished now Iran has more choice over where it buys from, exporters said.
New season deals
Indian exporters have signed deals to export a total of around 100,000 tonnes of soymeal for October to December shipment, said Rajesh Agrawal, chief co-ordinator at trade body the Soybean Processors' Association of India (SOPA).
By this time last year, exporters had sealed deals to ship 600,000 tonnes of soymeal.
"Slowly export parity has been coming back. But still Iran
is not active in the (Indian) market," said Agrawal.
Prices for soybeans, the key ingredient of soymeal, have been falling over the last few weeks, hitting a 13-month low this week on expectations of a bumper crop.
India is likely to produce 9.3 to 10 million tonnes of soybeans in 2014/15, higher than around 8.9 million tonnes this year, Shahra said.
Soybeans are India's main summer-sown crop and are a key factor in determining its edible oil imports.