August 30, 2010

India begins soymeal exports on better crop prospects

India kicked off soymeal marketing early this year by selling 12,000 tonnes to Thailand, with competitive prices and prospects of bumper output making more such deals likely, traders said.

India, Asia's top soymeal exporter, may corner a bigger share of the market in 2011, pricing cargoes at competitive rates which pose a direct challenge to exports from South America and the US.

Benchmark CBOT soymeal prices have dropped nearly 2% this month on expectations of record bean production in the US, and the outlook for strong supplies from India is likely to add to the pressure.

A global trading company sold Indian soymeal to Thai mills this week, the first from India's new crop, at US$412 a tonne, including cost and freight, for shipment in November-December, traders said.

Soymeal from India is being offered between US$410 and US$415 a tonne C&F into Southeast Asia, compared with rival South American cargoes quoted around US$430 a tonne.

India, which annually sells some 3-4 million tonnes of soymeal to feed millers in Asia, lost share on lower production due to a drought last year amid strong supplies from Argentina and Brazil. Traders estimate India's exports at around 2 million tonnes in the year to September.

Traders said more deals were likely in coming weeks as Indian prices were lower and there were prospects of bumper soy production this year.

A Mumbai-based trader said there could be about 200,000-300,000 tonnes of new export deals by September.

India's key monsoon rains were 29% above normal in the week to August 25, versus 6% below normal the previous week, the weather office said on Thursday.

The area under soy in the central state of Madhya Pradesh, India's biggest producer of the commodity, has risen to a record 5.4 million hectares and the weather is conducive to growth. Meanwhile, the new crop harvest will begin in October.