With the global community slowly easing sanctions on Iran in the last few months, soyabean processing units in Indore —the hub of soya processing in India — have felt the pinch.
Exporters have lost some of its key markets because prices of Indian soya meal are about $50 per tonne (Rs 31,500 per tonne) higher than global prices.
Resultantly major clients, including Iran and Japan, have turned to competitors like Argentina and Brazil due to big difference in prices.
According to Solvent Extractors Association of India, soya meal exports to Iran have fallen by more than 68% (3.62 lakh tones) between April 2014 and February 2015 as compared to the previous year.
High soybean prices and falling soya meal exports threaten to make soybean crushing unfeasible, say experts. On top of this, stagnant refined soya oil prices is also worrying processors.
"The crushing margins have been negative, resulting in low crushing this season. Soya meal exports to Iran have fallen drastically due to price disparity, and there will be no impact of any further easing of sanctions against Iran," Indore-based Soybean Processors Association of India (SOPA) office-bearer Rajesh Agrawal said.
Crushing soybean generates 18% oil and 82% oil meal that is used as poultry and cattle feed. In the current month so far, the average net crush margin in Indore was negative.
Soya meal exports during the current financial year up to February 2015 were pegged at 6.14 lakh tonnes as compared to 25.59 lakh tonnes during the same period last year, a drop of 76%.
The Indian soya meal is priced higher due to high prices of soybean as compared to the global soybean prices.
Industry experts say about 15-20 lakh tonnes of soybean will be left uncrushed in the current season, resulting in a huge carry forward to the next season.
This will drag prices down and hurt farmers, besides making crushing unfeasible for plants across the country.