February 16, 2010

India generates high sales of soymeal

India has taken advantage of market conditions to generate significant sales of soymeal, but more such sales are uncertain and will depend on weather conditions in Argentina.

The country has sold around 89,000 tonnes of soymeal in several deals for bulk shipment to Iran, Vietnam and Japan, trading executives said Friday (Feb 12, 2010).

"India's soymeal is getting undercut by South America, but a window of opportunity opened recently, due to which several contracts have been clinched for shipments in February and the first half of March," said a senior trading executive.

Another opportunity to make aggressive sales could come up in the next few weeks if rains delay crushing of soy in Argentina, he noted. He said sales were made at US$403-US$423/tonne, cost and freight.

Three cargoes of 12,000 tonnes each have been sold to buyers in Japan for around US$423/tonne, cost-and-freight. Traders said Japan's preference for the non-GM soymeal gives India an advantage.

Recent cold weather in the US, which delayed soy-crushing operations, has also prompted many global trading companies to secure Indian soymeal to meet their export commitments.

A buyer in Vietnam has purchased a 30,000-tonne cargo of Indian soymeal at US$416/tonne, C&F.

"Since many buyers in Southeast Asia are looking for smaller volumes, it's not feasible to make purchases from the Americas," said an executive at a global trading company.

He said freight for a vessel carrying 30,000 tonnes of soymeal into Southeast Asia from the US is likely to be more than US$75/tonne, while it may be around US$35/tonne if shipped from India.

Indian soymeal is also being offered at a discount of around US$15/tonne due to lower quality.

Iran, which usually buys soymeal with less protein, has purchased a 23,000-ton Indian cargo for around US$403/ton, C&F. Iran imported more than 75,000 tonnes of Indian soymeal between April and January.

Traders said India continues to sell small volumes in containers to Southeast Asian destinations, but it's mostly being undercut by South America.

Despite the longer voyage time and higher freight costs, Argentine soymeal is being offered at a much lower price of around US$403/tonne, C&F for March shipment to Southeast Asia, as growers are saddled with a bumper crop. For June shipment, South American sales were made last month to South Korea at US$384.80/tonne.

India's offers for March shipment are around US$415/tonne, even after factoring in lower freight and the discount over quality. For June, due to the lean production season, prices may even be higher.

Due to high local Indian prices of soy of around INR22,000/tonne (US$475), many crushing units don't find it viable to produce soymeal and are currently shut down.

According to data from India's Solvent Extractors' Association, India's soymeal exports fell to 240,318 tonnes in January from 521,243 tonnes a year earlier. The Soybean Processors Association of India put the figure at 274,240 tonnes, down from 555,734 tonnes.

Due to the recent spate of deals, traders expect exports to be higher on month in February between 250,000 and 300,000 tonnes but nowhere near year-earlier levels.