Weak rupee affecting pulses imports: USDA

8220;While large Indian traders of bulk commodities generally hedge against exchange-rate risk,small traders as a rule do not,preferring to bear this risk themselves. As a result,commodities traded primarily by small and medium traders are entering an import slump,8221; the report said.

In the last four months,the rupee lost 20 per cent of its value relative to the US dollar,USDA pointed out adding that the eurozone financial crisis has bid up the dollar globally as investors use the dollar as a safe haven.

Meanwhile,rupee settled a roller-coaster 2011 at Rs 53.10/11 against the dollar. On December 15 last year,it slipped to sub-54 level for the first time in its history at 54.30 against the dollar.

In the calendar year 2011,the rupee has crashed by 18.79 per cent.

According to USDA,almond 8212; the largest single US farm export to India 8212; importers are breaking even at best and if the exchange rate slides further it will be in red.

8220;Traders indicate that if the exchange rate should drop below 55 rupees to the dollar,imports would drop off dramatically. Some are already forecasting a drop in the next quarter from the year previous in the range of 20 to 40 per cent,8221; it added.

Similarly in the case of apples,the inbound shipments are also slowing down.

Chinese-origin apples in ports of entry mainly Chennai and on the water are arriving but new orders are reportedly drying up. Importers are in a 8216;watch and wait mode8217; and if the exchange rate deteriorates more,orders from the US might largely dry up,the USDA report pointed out.

Likewise,the weakening rupee is also affecting pulses imports.

Pulse imports mainly yellow peas,chickpeas and lentils have slowed despite a steady domestic demand and with the rupee8217;s value depreciating by nearly 20 per cent over the last three months,domestic pulses prices have gained by about 5 per cent,USDA said.

Vegetable oil imports are also reflecting the bearish sentiments following the depreciation in the Indian currency.

8220;Since imported oils have become costlier,Indian vegetable oil importers,rather than negotiating only with suppliers,are negotiating prices with domestic buyers as well in search of a positive margin and simultaneously disputing contracted deliveries from suppliers,8221; it said.

However,exporters of rice and maize are gaining from the depreciating rupee.

8220;Trade sources report that total non-basmati rice export contracts from September through mid December are estimated at around 2 million tonnes of which about half has already been shipped,8221; USDA noted.

In the case of corn maize,the rupee value decline has supported exports. Maize contracts October-mid December 2011 are estimated at 9,00,000 tonnes compared to 6,00,000 tonnes during the same period last year,it said.

8220;Currently,Indian corn is very competitive in the south Asian market with prices in the range of USD 240-245 per tonne CIF,8221; it added.

Market sources report that India8217;s corn exports in marketing year MY 2011-12 may surpass 3 million tonnes compared to 2.8 million tonnes in MY 2010-11 if the value of the Indian rupee stabilises at the current level,USDA noted.

Marketing year starts in November and ends in October.

However,wheat exports despite a weakening rupee have not been able to pick up.

The wheat export market has remained bearish due to continued weak international prices and firm domestic prices,it said.

8220;Despite the depreciation in value of the Indian rupee,Indian wheat is available for around USD 245-250 per tonne FOB,which is not competitive against other origins Australia,CIS countries in the target markets Middle East and South Asian countries,8221; USDA added.

The US farm body forecast that the further depreciation in the Indian currency could affect consumer demand.

The effect of the rupee8217;s fall is that firstly,traders are unwilling to borrow dollars for additional imports out of concern the exchange rate may continue to slide,USDA said.

Secondly,future imports will be sold at higher rupee prices to cover the higher cost of dollars,thus,reducing effective consumer demand,it added.