MUMBAI: Indian soymeal suppliers are renegotiating deals with Iranian buyers for April and May shipments as a rally in soybean prices in the south Asian country has erased margins for exporters, three dealers and an industry official said.
Indian prices of soybean, which is crushed to produce meal and oil, have risen more than a fifth in the last two months, lifting the price of soymeal on a free-on-board (FOB) basis to $660 per tonne.
Demand for Indian soymeal has slowed significantly due to the higher prices, and buyers are seeking alternative South American supplies, the dealers said.
"Most deals were signed between $560 to $580 per tonne," said an exporter based in the central city of Indore, India's soybean processing hub.
"Then soybean prices were around 33,000 rupees ($610) per tonne. Now executing those deals is difficult. Soybean prices have spiked above 40,000 rupees," said the exporter, who declined to be named, in line with his company's policy.
India's soymeal exports in April are likely to fall to 200,000 tonnes, down 36 percent from a year ago, unless buying from Iran improves, said Rajesh Agrawal, chief co-ordinator at trade body the Soybean Processors Association of India.
"Indian soymeal is very expensive. We are charging a premium of $180 per tonne over South American supplies," Agrawal told Reuters.
"The higher price is deterring Iran and other buyers. One or two shipments to Iran have already been delayed."
Iran, battling Western sanctions aimed at discouraging its nuclear programme, is India's biggest soymeal importer.
It bought 870,776 tonnes of soymeal in the year ending in March, or four times the year-earlier figure of 216,335 tonnes, after the two countries agreed to settle trade in rupees.
India has been paying for Iranian crude oil imports in rupees, which Iran in turn uses to buy Indian commodities, including rice and soymeal.
"Farmers are not bringing beans into the spot market as they expect prices to rise, while oil mills have to buy at higher prices to fulfil their soymeal export commitments," said Vedika Narvekar, a senior analyst with Angel Commodities Broking.
Indian farmers hold around 2.5 million tonnes of soybean, up from 1.3 million at the same time last year, Agrawal said.
Asian buyers usually prefer Indian soymeal over Latin American supply because it is not derived from gene-modified seeds. Other key buyers of Indian soymeal in 2012/13 were Japan, Vietnam and Thailand. (Reuters)
