From Chairman's Desk

April 2018

Dear friends,

 

Exports during May 2018 were valued at US $ 28.86 Billion as compared to US $ 24.01 Billion during May 2017 exhibiting a positive growth of 20.18 per cent.

 

Cumulative value of exports for the period April-May, 2018-19 was US$54.77 Billion as against US $48.65 Billion registering a positive growth of 12.58 per over the same period last year.

 

Exports of groundnut declined to 5,03,155  tons during April-March, 2017-18 from 7,25,710 tons during the corresponding period previous year. In value terms also groundnut exports declined to Rs. 3384.42 crores during this period from Rs. 5444.33 crores in the corresponding period of 2016-17.

 

Despite the problems the peanut market is facing at the moment, things remain fairly quiet on international fronts. The big question now is the 2018 US crop. The USDA has previously estimated a reduction in acreage of 18%. With cotton price at 91 cents for December 19, the delay in plantings due to rain and the fact that some peanut acres need to be replanted, we could see peanut acres being reduced further, possibly up to 22% to 25%.

 

The International market has been dominated by talks on the Argentine 2018 crop with the market trying to understand how low the production will be and how bad the quality will be. Surprisingly many European buyers, who get a big portion of their supply from Argentina, have been skeptical about the extent of the problems Argentina faces.

 

Plantings in China are basically finished. As usual, it is difficult to ascertain what was planted, but what seems to be sure is that China definitely planted less than last year.  The biggest drop in plantings seems to be in the North of China where we could have 15 to 20% less. The traditional area could have a reduction of 10 to 15% at a minimum. We will have to wait for September/October to have an idea of the production.

 

Sesame seed exports during April-March, 2017-18 increased to 3,36,844 tons in comparison to 3,07,329 tons during  corresponding period previous year. In value terms, Sesame seed exports increased to 2990.93 crores from 2695.84 crores.

 

We have seen prices moving up significantly in last few weeks due to healthy demand from overseas consumers. The fact that East African countries like Tanzania etc. have smaller crops and inferior quality have helped the situation. Rainfall is delayed in most parts of India and this could lead to larger planting of sesame this season.

 

Prices of various oilseeds are hovering around the levels as follows:

Sesame Seeds

Basis FOB

Price per MT

(June, 2018)

Natural Whitish 99/1/1

 Mundra / JNPT

 1440

Natural Whitish 98/2/2 

Mundra / JNPT

 1420

Hulled autodried Sortex regular 99.95%

 Mundra / JNPT

 1840

Hulled autodried Sortex Premium 99.97%

Mundra / JNPT

1920 

Black 99/1  Sortexed

Mundra

1490 

Black Jet Sortexed

Mundra

 1575

Ethiopian Whitish Humera

Djibouti  

1625 

Sudanese Whitish Gederaf

Port Sudan

1620 

Sudanese Reddish

Port Sudan

1310 

 

 

Groundnut

Basis FOB

Price per MT

(June, 2018)

India

50/60 Java

Mundra

 1030-1080

60/70 Java

Mundra

 1000-1050

80/90  Java

Mundra

 970-1010

40/ 50 Bold

Mundra

 895-950

50/60 Bold

Mundra

 880-920

60/70 Bold

Mundra

 850-880

50/60 Java

Chennai

1060-1100

60/70 Java

Chennai

1030-1050

80/90 Java

Chennai

1000-1020 

 

 

Other Oilseeds/oils

Basis FOB

Price per MT

(June, 2018)  

Safflower Seed 1%

JNPT

570-590

Mustard seeds Bold 1%

Mundra

640-660

Mustard seeds small 1%

Mundra

680-700

Castor Seeds

Mundra

680-700

Castor Oil FSG

Kandla, in flexi

1350-1370

Source: Trade Estimates

 

The production of groundnut has been increasing since last two years reaching 89.42 Lakh Tons (In-Shell).  Despite continuous increase in production, Minimum Support Price (MSP) of groundnuts were increased from Rs 4030 per Quintal in 2015-16 to Rs 44450 per Quintal in 2017-18, resulting in  groundnut prices at artificial higher levels. If MSP would not have been increased, the groundnut prices should have been around Rs.35 per kg. instead of Rs.45 per kg due to MSP. The lower price of groundnut would have ensured competitiveness of groundnuts in international markets. We have requested the Government to look into this and do the needful so as to ensure availability groundnut at lower prices to that exports become viable.

 

Indian prices of Groundnut Kernels are 10–15 % higher than the African origins and these origins enjoy duty free status in China so we have a double challenge to compete with the 15 % import tax as well, making us 25 – 30 % more expensive.

 

Prices of our competing countries such as USA and Argentina are much lower since they are selling at relatively lower premium resulting in downward pressure on groundnut prices in international markets. Also, the production of groundnuts (kernels) in China has increased from 119 lakh tons in 2016-17 to 123 lakh tons in 2017-18.

 

We need to brace up ourselves to meet these challenges. The Council would look forward to you for your suggestion to address the situation of steep decline in groundnut exports.

 

During my recent meeting with DGFT we requested for Inclusion of oilseeds in the RBI list of products eligible for Interest Equalisation Scheme, allowing merchant exporters to avail benefit of lower interest rates under the "Interest Equalisation Scheme”, providing 5% MEIS for groundnut and groundnut oil exports and other measures.

 

We also highlighted that allowing self-sealing facility (As per Circular No. 26/2017-Customs)  for exports was expected to facilitate speedier clearance of cargo but exporters are facing difficulties in the process which is creating Speed Breakers for easy flow of trade. The custom system (RMS) is selecting containers on a random basis, without any intelligence report and this is causing lot of hardship to exporters. The frequent inspection of containers affects quality of the products which have been packed taking necessary quality measures. Besides, the cost involved in the opening of the container is also exorbitant. We have requested that the frequent random selection of container for inspection without any solid valid reasons must be avoided and a grading system may also be implemented where regular exporters are fast tracked and not inconvenienced.

 

The monsoon’s progress in June has been rapid but erratic, falling 5% below average in the first month of the season and obstructing the planting of kharif, or summer sown crops, particularly pulses and oilseeds. According to recent reports, due to erratic rainfall, crop planting is reduced by 21% to 165.2 lakh hectares at the end of June, 2018. The situation can improve since farmers can quickly plant crops as soon as rainfall improves.

 

As per the data released by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA), the utilization of Shelled Edible Grade has increased by 2% with Peanut Stocks in Commercial Storage totalling to 3.34 Billion Pounds (which includes 2.51 billion pounds of farmer stock)  compared with 2.24 billion pounds a year ago in USA.

 

The US Senate passed the farm bill pegged at US$ 428 billion farm bill introducing imposition of strict new work requirements on able-bodied adults seeking food stamps. Under the controversial House food stamp plan, most adults would have to spend 20 hours per week either working or participating in a state-run training program to receive benefits under the Supplemental Nutrition Assistance Program, known as SNAP, which provides an average payment of $125 per month to 42.3 million Americans.

 

I am happy to inform you that the Council would be organizing   its Annual Trade Meet/Award Function to be held at Hotel Radisson Blu, Mahabalipuram during 26th - 28th October, 2018. Mahabalipuram is one of the beautiful places in south India having excellent coast and natural environment with greenery would be an ideal place for mixing business with leisure during this event.  The details of the event would be sent to you at the earliest. Meanwhile, please block these dates in your calendar so as to take advantage of this excellent opportunity. 

 

With Best Wishes and Regards

 

 

Sanjay shah

(Chairman)

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