October 28, 2008
India Feed Weekly: Soy arrivals halve as farmers hold back stocks (Week ended Oct 23, 2008)
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Soymeal prices this week were around Rs. 13, 200 to Rs. 13, 400 per tonne in Kota market and traded at Delhi spot market on Thursday, October 23, 2008 at around Rs. 15, 000 to Rs. 15, 200.
Transaction prices of feed meals were all a little bit higher or stable.
Corn from Uttar Pradesh and Rajasthan remain stable in Delhi markets, with Bihar corn still out of the market due to floods.
Prices of pearl millet in Delhi were up slightly.
Prices of Ground Nut Extraction (GNE) 40 % and 45 % which were stable for the last two months continued to fall after a decline last week.
It is further assumed that after Deepawali, October 28, 2008; prices of GNE will go down further.
Price of Dry Fodder was stable in comparison to the last six weeks while price of green fodder went up slightly.
Soy arrivals halve as farmers hold back stocks
Even as the country is poised to harvest yet another bumper crop of soy this year, market arrivals in Madhya Pradesh - the number one producing state - are down by almost half.
Most major Indian markets from have since the start of this month reported cumulative sale volume declines ranging from 25 to 75 percent over the corresponding period of last year.
"The arrivals are markedly low, whereas this is the period when harvesting is at its peak," noted Rajesh Agarwal, spokesperson of the Indoreâ€“based Soyabean Processors Association of India (SOPA).
The lower arrivals are partly due to staggered sowing followed by late rains in September, leading to harvesting delays and excessive moisture in the grain. But a more fundamental factor relates to the prevailing market uncertainty emanating from the global financial meltdown.
Bumper crop of soy
The current year has seen a record 9.6 million hectares being planted under soy across the country. With prices touching unprecedented levels of Rs. 26, 000 a tonne during June-September and ruling at Rs. 20, 000 plus since January, farmers were enthused to bring in nearly 800,000 hectares additional area under the crop.
The sentiment was further bolstered by soymeal exports hitting an all time high of 4.9 million tonnes in 2007-08 (October-September).
However, the recent worldwide credits crunch and exit of investors from commodity markets has completely transformed the situation. Soy for November delivery at CBOT is now trading at US$9.50 a bushel, way below the record US$16.37 of July 3, 2008.
Soya meal export prices dip:
The above trend is also reflected in the realisations from soymeal exports as well as solvent oil sales. Currently, meal shipments for November-December are quoting at US$280-285 a tonne, free-on-board Kandla/ Bedi, after averaging US$374.35 in September, US$ 484.73 in August and US$ 492.69 in July.
At an export price of $280-285 a tonne, the corresponding cost of delivery at the rail head closest to the deports would be Rs. 13, 800 to 14, 000 a tonne. If one were to deduct around RS. 900 a tonne towards rail freight and loading/ unloading from the extraction plant, the ex-factory realisation on soymeal would come to RS. 12, 900 to 13, 100 a tonne.
Yellow soy is now fetching Rs. 15, 500 to Rs. 16, 000 a tonne in auctions at Indore, net of the four percent value-added tax. "The prices are obviously not up to the expectations of farmers. So, they are not bringing the produce into the market," he added.
However, in the background of a bumper crop and the need to generate cash before Diwali, which falls on October 28, 2008, there are limits to the quantity that can be held back. Complicating the scenario would be assembly elections in Madhya Pradesh due on November 25, which may increase the pressure on the Government to act.
Weekly quantity arrival and Price chart of dry fodder in Delhi wholesale market:
Price of Dry Fodder was available about 812.65 tonnes in the last week and stable in price comparison to last six weeks and settled at an average of Rs. 3, 200 per tonne.
The Green Fodder around 152.80 tonnes was also available at a price of Rs. 14, 900 per tonne, an upward of Rs. 100 per tonne as compared to last week's price.
The Green Fodder was also available in Delhi market coming from Samalkha, a small town in Panipat district of Haryana state on October 24, 2008 and was available at a nodal price of Rs. 14, 900 per tonne.
Increasing fresh arrivals of soy and higher output may further pressurize prices. Corn from harvesting has picked up and increased arrival continues to pressure prices in the market. Fodder prices (Dry and Green) may remain stable or little bit on downward trend at this week's level.
US $ 1 = Rs. 49.700 (Oct 28, 2008)
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