June 28, 2010

Soymeal supplies from India, Asia's biggest exporter, will drop as much as 34% this year as a surge in local seed prices prompts buyers to shift to South American and US supplies, a processors' group said.

Shipments in the year to Sept 30 may fall to 2.1 million tonnes from 3.2 million tonnes a year earlier, said Rajesh Agrawal, coordinator for the Soybean Processors' Association of India. Exports in June may exceed the 60,228 tonnes shipped in May as farmers increased bean sales after prices recovered, he said.

Reduced supplies from India may help stem a 14% decline in Chicago feed prices and allow the US, Brazil and Argentina to boost shipments to buyers in Vietnam, Japan, South Korea and Indonesia.

India, the top vegetable oils user after China, has yet to crush more 2 million tonnes of soy after duty-free imports of edible oils and lower animal feed prices made it unprofitable, Agrawal said. Soymeal, India's largest oilseed meal export, is added to poultry feed as a form of protein.

Soymeal has advanced in eight out of the past 10 sessions. July-delivery soy futures on the National Commodity & Derivatives Exchange Ltd in Mumbai fell as much as 0.3% to INR1,905 (US$41.29) per 100 kilogrammes. The commodity gained 26% last year.

The country's soymeal exports slumped 41% to 1.62 million tonnes in the eight months through May from a year earlier as buyers from Vietnam, Thailand and Indonesia switched to supplies from Latin America and the US.

The area planted to soy may drop 5% to 7% this year as farmers in the states of Madhya Pradesh and Maharashtra, the biggest growers, grow more profitable crops such as cotton, sugar cane and lentils, Agrawal said.

"Farmers are getting a much higher price than normal for the seeds and that should prevent large-scale diversion," he said.

An early start to planting in Madhya Pradesh was delayed after monsoon rains stalled in the past week, he said.

India's monsoon, the main source of irrigation for the nation's 235 million farmers, is 11% below average this season, slowing early sowing of soy and rice in the biggest growing regions, the India Meteorological Department said.