July 1, 2011

 

India to fight for soymeal export market against South America

 

 

India's soymeal exports will struggle in the upcoming marketing season in Asia as competition grows from South America.

 

A deadlier blow will come from Vietnam, as the nation starts its first bean processing facilities to feed its fast expanding livestock industry, a move that could shave some 30% off its imports.

 

Vietnam accounted for about 20% of the shipments from India-Asia's top meal exporter and the world's fourth largest-in the year to March 2011.

 

The benchmark US soymeal price, on track for a third straight monthly loss in June, could slide further as buyers hold back purchases amid global oversupply.

 

"The meal market is already under pressure, thanks to the supplies from Brazil and Argentina. It has become a buyers' market," said Rajesh Agrawal of central India-based Soybean Processors Association.

 

Asia's soymeal importers are expected to go slow in making purchases for the new season beginning October, knowing that South America, blessed with bumper crops, still has large unsold stocks and the Indian crop is looking good following a normal monsoon in the oilseed belt.

 

"We don't know the size of the US crop yet but the Indian crop looks good and South Americans still have stocks to sell," said Abah Ofon, agricultural commodities analyst with Standard Chartered Bank in Singapore.

 

"I think the near-term outlook on soymeal is bearish, although prices will remain volatile as we go through the US growing season."

 

After near-record harvests, Argentina and Brazil-the world's top two exporters of soymeal-are expected to ship more.

 

Argentina is seen shipping 30.2 million tonnes in the year to October 2012, up from 29.6 million tonnes a year ago and 24.9 million tonnes in 2009/10, according to the USDA.

 

Brazil's exports are forecast to climb to 14.9 million tonnes in 2011/12, up from around 14 million tonnes in the previous year.

 

In contrast, India's exports are estimated to drop to 3.9 million tonnes in 2011/12, down from 4.5 million tonnes.

 

Asia's top soymeal importers such as Indonesia and Thailand are already slowing purchases.

 

Indonesia has yet to contract 85% of its import requirement of 700,000-800,000 tonnes for the last quarter, while Thailand needs to book 90% of its estimated imports of 600,000 tonnes for the period. Typically, Indonesia and Thailand buy at least four to six months in advance.

 

"Buyers are all going very slow as there is no shortage of supply," said one trading manager at an international trading company in Singapore. Normally, by now Indonesia and Thailand buy 40-50% of what they need for the last quarter."

 

Also eroding India's market share is China's recent move to dispose of excessive soymeal supplies in sales to Japan and Vietnam as domestic demand slows.

 

China sold up to 80,000 tonnes to Japan and Vietnam last month, almost double April shipments. China is the world's biggest soymeal producer but consumes the bulk its production to feed the world's largest livestock industry.