Soft rupee thrills commodity exporters

NEW DELHI: The recent weakening of the rupee has come as a Diwali bonanza for commodity exporters who expect a jump in export orders, which would benefit farmers also.

“Weak rupee is good for agri economy,” said Prerana Desai, head of commodity research at Edelweiss Agri Value Chain. Edelweiss Agri Value Chain.

“It ends up increasing farmers’ income as all excess commodity get exported thereby supporting domestic market price,” she said.

On Friday, the rupee closed at 65.28 against the dollar.

Export contracts for commodities such as basmati rice, groundnut, soyabean meal and cotton, for which the harvest has started or would begin in the next fortnight, are either being signed by exporters or talks are going on, industry insiders said.

Desai said exports of paddy, cotton, castor oil, guar, soyabean and mus tard meal, ground nut and sesame are expected to rise this year. “Immediately the farmer may now get higher price as new crop arrival is there,” she said.

“But exports will limit down fall and post the surplus is shipped, farmer will get good returns.” Priyanka Mittal, director at KRBL Ltd that owns India Gate brand of basmati rice, said that with the current crop scenario, local prices of high grade export variety basmati rice are anticipated to remain firm by 15%-18% at Rs 6,000 6,500 a quintal. “A weak rupee will enable basmati exporters to quote competitively to their buyers,“ she said.

Mittal said a softer rupee has come as a relief for commodity traders who have been grappling with GST implementation issues on the domestic front. Davish Jain, chairman of Soybean Processors Association of India, agreed. “The weakening of rupee is some relief,“ he said.

“If the soyabean oil import influx is limited then our export competitiveness will increase. This will ensure that we crush more oilseed and meal cost becomes competitive for us to sell in Asia and Europe.“

Jain said the industry was keen to increase the soyabean meal export figures this year from 1.8 million tonne in 2016-17 and 0.4 million tonnes in 2015-16.

Girdharilal Sarda, president of Guar Gum Manufacturers Association, said the weak rupee would make Indian guar produce more competitive vis-a-vis Pakistan in global markets.

This comes in background of increased exports of guar gum from the country post US President Donald Trump’s move to encourage oil drilling in the country.

While many factors, from quality to prices of commodities, determine India’s export competitiveness in the global market, the value of the rupee is always a key factor.

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