August 26, 2004

South Korean Buyers Eye Indian Soymeal Amid Quality Concern
 
Several South Korean feed buying groups are eyeing Indian soymeal for its availability of small-sized cargoes and relatively lower prices. However, quality concerns are delaying actual deals, trade participants said Wednesday.
 
"The Indian soymeal quality is very irregular, or not even. Sometimes you get really good meal from there, while other times maybe very bad," a trader in Seoul said.
 
At least one South Korean group is considering buying 30,000-45,000 metric tons of Indian soymeal this week, traders said. The buyer is currently pooling orders from its members.
 
In some previous incidents, buyers have complained about quality Indian soymeal being blended with various other soymeals at Indian ports before being shipped to overseas markets, resulting in a lower overall quality and inconsistency of the exported meal.
 
The measurement of soymeal quality includes moisture level, protein level and fiber content. A cargo of poor quality soymeal can lead to severe financial loss for compound feed makers.
 
Traders said South Korean buyers are quite confident of the Indian soymeal's protein content level, but are worried about the moisture level.
 
"They are holding off buying because of concern over quality," said another Seoul-based trader with an international trading house.
 
Suppliers can address the buyers' concern, traders said, by changing the contract from loading port quality inspection final to discharging port inspection final.
 
Currently, suppliers offer U.S., South American and Indian soymeal at different prices, but with the same loading port final term.
 
In terms of South American or U.S. soymeal, buyers said they are familiar with the loading ports and inspection systems there, so they can accept the loading port final term carried in the contract.
 
South American soymeal with 45.5% protein level is offered around $233.20 per ton, cost and freight to South Korea. Prices for Indian soymeal with 46.5% protein level weren't immediately available, but traders said any offer below $238.32 per ton, C&F to South Korea, would be considered attractive.
 
Generally, a 1% difference in the protein level translates into US$5 a ton in final price terms.