Yuan appreciation may bode well for exports of various Indian goods, but this would not hold for soyameal, say experts.
"Yuan strength will make imports cheaper for China. So I expect China will import cheaper soyabean from big producers like Argentina, Brazil and the US and process it to make large quantities of soyameal, which they will export in the global market," Soyabean Processors Association of India (SOPA) spokesperson Rajesh Agarwal said.
Yuan appreciation would create more competition for Indian soya products in the global market in favour of the neighbouring country, as China would stockpile the raw material through cheaper imports, he said.
"Yuan appreciation doesn't paint a rosy picture for Indian soyameal," he added.
Contrary to apprehensions that the Chinese central bank may not allow its currency to rise, the yuan appreciated today to its highest level against dollar since July, 2005, when it was revalued. It closed at 6.81 a dollar today.
Except items like soyameal, Chinese exporters would stand to lose against India and other rivals in the international market on account of the yuan rise, as their margins will be reduced.
Exports of soyameal from India were down 41 per cent to 1.6 million tonnes between October, 2009, and May, 2010, on account of poor availability and the high cost of soyabean in the domestic market.
Out of the total shipments, exports to China stood at just 49,928 tonnes.
Brazil and Argentina, the biggest producers of soyabean, have produced seven million tonnes more oilseed this year, due to which soyabean prices are low in the Indian market, prompting farmers to hold back stocks.
Soyabean production in the country, as per SOPA, was pegged at 9.72 million tonnes in 2009-10. However, government data pegs output higher at 10.54 million tonnes.
