January 14, 2005
India's Corn, Soy Exports Reduced Due To Strong Local Demand
India has harvested bumper soybean and corn crops, but exports have not even reached the halfway mark, compared with last year. This is due to a strong revival in the poultry industry, which is actively buying the feed ingredients for local use.
With world feed grain and protein prices nowhere near levels seen last year, traders in the South Asian nation are happy selling their produce to the domestic poultry feed makers and this has sharply reduced the availability for exports.
"I know an Indian trader who used to lead delegations during this time of the year to Southeast Asian nations to push sales. But this year, he is happy selling in the domestic market," said Dinesh Bhosale, an official of the Poultry Federation of India.
Although India did not report a single case of bird flu last year, at a time when many Southeast Asian nations were hit by the deadly virus, widespread panic reduced poultry consumption in the country in the first half of 2004.
But since July 2004, the poultry market has rebounded and the industry has been registering a 10 percent growth, trade officials said.
"The poultry industry used to take about 100,000 tons of soymeal a month. But now, they are using almost 180,000 tons," Bhosale added.
India produces around 1.5 billion birds, about 44 billion eggs and about 13 million tons of poultry feed a year.
"Indian feed export prices are not coming down and there is a reason behind it. Traders are probably able to make the same margin by selling it in the local market which they would make if they exported," said a leading regional grain trader.
India has harvested a soybean crop of around 6.5 million tons, slightly lower than last year's 6.85 million tons. But the amount is still considered high, compared with the average of less than 6 million tons of the past 10 years.
The country has harvested a corn crop of close to 16 million tons this season, about 33 percent more than last year's 12 million but exports are seen falling sharply to around 200,000 tons from 750,000 tons a year earlier. Traders were earlier talking of having an export surplus of about 3 million tons.
"Prices in the domestic market are at good levels. Therefore, not a lot of soymeal is coming out for export," according to Vijay Iyengar, managing director of Agrocorp International Pte Ltd, a Singapore-based commodities trading firm.
Trade officials said India's domestic soymeal consumption could rise by about 50 percent to around 2.7 million tons from just about 1.8 million tons last year.
The sharpest growth in demand is expected to come from the poultry sector, which is expected to consume about 2 million tons of soymeal, compared with just 1.3 million tons in 2004.
Last year India received prices close to around $325 a ton for its soymeal. But this year, overseas buyers are not willing to pay anything more than $205-$210 for Indian supplies since Argentine soymeal is available at those prices.
Indian traders said they were getting those levels in the domestic market. "So why export?" asked one trader.
Domestic soymeal consumption has also risen because the availability of groundnut meal is very limited."
Indian traders are not willing to export at prices lower than $220 a ton, free-on-board. "Therefore the landed cost of Indian soymeal is not turning out to be attractive for Asian buyers," said Timothy Loh, marketing manager for the American Soybean Association.
While Argentine corn is available at $135 a ton, including cost and freight, in Southeast Asia, Indian corn, despite a huge crop, is being offered at levels close to $155 a ton, a price at which no Asian buyer is keen to buy.
The changing Indian equation, in addition to China's uncertain corn export policy, has thrown open an opportunity for Argentina to push corn and soymeal sales to this region.
"Normally during this time of the year people used to queue up for India soymeal and Chinese corn. But now Argentina has the advantage," said one trader.
