Oilmeal prices have already declined by a steep 20% since May this year after bumper global soybean crop estimates. Data compiled by the apex trade body the Solvent Extractors' Association (SEA) of India showed average price of soybean meal has slumped by 20% to $569 a tonne in September from $710 a tonne in May this year. Similarly average rapeseed price fell by 9% to $237 a tonne in September from $261 a tonne in May.
This is a positive indication for Indian oilmeal exporters as they have been ensuring prices today for delivery of meals in futures. Through this, however, Indian crushing units would be able to compensate part of their loss from edible oil sales. Iran, the Gulf countries, Far East and European countries are the major buyers of Indian oilmeals for use as bird feed and animal feed.
"Indian oil meal exporters have intensified selling in forward contracts for delivery after December as they feel prices would decline further due to bumper soybean crops in the United States and other major producing regions," said Anil Agrawal, Director, Sanwaria Agro Oils Ltd.
Oilmeal exports from India declined by a steep 43% at 0.95 million tonnes between April - September 2014 compared to 1.66 million tonnes in the corresponding period last year. While repeseed meal exports jumped by a quarter to 0.57 million tonnes from 0.42 million tonnes in the first half of previous fiscal, soybean meal exports hit the worse. In the first half of the current financial year, exports of soybean meal nosedived by over 87% to a negligible 111,027 tonnes as against 873,481 tonnes of shipment reported in the corresponding period last year.
B V Mehta, Executive Director of SEA attributed the steep fall in oilmeal exports to lower crop than expected crops that resulted into high cost of soybean in local market. "This lead to total disparity for soybean meal in the international markets. Brighter side is the share of rapeseed meal has increased from 417,668 to 572,352 in last six months which partly compensated the decline in soybean meal exports," said Mehta.
The Food and Agricultural Organisation (FAO) of the United Nations forecast a bumper oilseeds harvest globally this year on favourable climatic condition. After the last two season's record-breaking harvests, global oilseed production is tentatively forecast to expand by another 5% in 2014/15, possibly topping 535 million tonnes.
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The increase would be almost entirely on account of soybeans. With a current forecast of 311 million tonnes, global production of soybeans, would outstrip last season's result by 10 percent. The surge should arise from both record plantings and best-ever average yields.
"Preliminary forecasts for 2014-15 suggest a further improvement in the global supply and demand balance. For meals-cakes, a sizeable surplus in supplies could push global inventories to historical highs. This, along with likely improvements in stock-to-use ratios, suggests that there is considerable scope for international meal prices to soften further. In addition, further downward pressure could arise from abundant global supplies of feedgrains," FAO said in its latest report.