April 8, 2011

 

Insecurity shrouds India's corn, soymeal deliveries to Vietnam  

 

 

Vietnam has been taking Indian corn and soymeal deliveries since March after rejecting two shipments for insect infestation, but Indian industry officials remained on the edge.

 

The continuation of shipments to Vietnam is deemed crucial due to the Southeast Asian country's traditional role as a major buyer of India's corn and soymeal, and both sides would not want to hurt the overall relationship, traders said.

 

India exports around 300,000 tonnes of corn and 700,000-800,000 tonnes of soymeal each year to Vietnam, traders said.

 

"Vietnam has still been receiving small volumes of corn and soy from India after the incidents," a Vietnamese trader in Ho Chi Minh City said on Thursday (Apr 7). He said the goods were delivered under contracts signed before the detention of the two shipments.

 

"In any case, Indian corn and soymeal are still coming," another trader at a foreign company in Vietnam said. He said the soymeal was sold to Vietnam in containers at US$430 a tonne, cost-and-freight (C&F) basis, with between 40,000 and 50,000 tonnes arriving last week.

 

Vietnam's plant protection authorities had detained two ships in late January. Since the soymeal was carried together with the corn cargo that was infected by the beetle, both had been rejected despite Indian proposals for refumigation. The total 50,000 tonnes of Indian corn and soymeal had since been sold to Indonesia.

 

Indian shippers had been in active contact with Vietnamese buyers to seek guarantees against the risk of rejection, while Indian authorities have tightened up inspections on the fumigation process, traders in Vietnam said.

 

However, Indian industry officials remained nervous. "It is still a hanging sword," said B.V. Mehta, executive director of the Solvent Extractors' Association of India, adding that Indian exporters fear Vietnam might turn away cargoes by raising quality or fumigation issues, leading to losses and demurrage charges.

 

A delegation led by India's trade ministry officials would help resolve the row at least for the near future, he said.

 

India, a key supplier of corn to Southeast Asia, is likely to export 2.8 million tonnes in the year from October, sharply up from about 700,000 tonnes in 2009/10.

 

One ship arriving in March has unloaded nearly 20,000 tonnes of Indian corn in southern Vietnam while corn has also been transported in containers or smaller ships, each carrying 5,000 tonnes to 6,000 tonnes, a third trader at a foreign company said.

 

He said Indian corn price has risen about US$50 a tonne after the incidents to nearly US$340 a tonne, C&F.

 

Another ship is set to arrive in mid-April with up to 15,000 tonnes of Indian corn, the first trader in Ho Chi Minh City said.

 

The corn was sold under several lots to Vietnamese buyers at a price of around US$300 a tonne, C&F, much lower than US$370 a tonne for Argentina's corn.

 

"The shipper has guaranteed that if there is any rejection problem, they will take responsibility to sell the cargoes to a third country," he added.

 

On domestic markets, corn has been holding at high levels of VDN7.4 million (US$354) a tonne since early March, up 10% from January before the ships were detained.

 

Vietnam has also been buying corn from Thailand and Australian feed wheat to fill in the shortage last month due to the rejections of Indian cargoes, he said.