November 4, 2013

 

India's 2013-14 soymeal export forecast down by one million tonnes

 

 

Due to rain that damaged the oilseed crop in the main growing areas during the harvest, India's soymeal exports may be limited to four million tonnes in 2013-14, around a million tonnes lower than early forecasts.

 

But exports should still be up from last year and, as deals have been closed for about 900,000 tonnes of the animal feed in the new marketing year from October 1 for shipment until December. Deals could pick up once the quality of soy arriving in markets improves.

 

"Soymeal exports will be less than early expectations as the soy crop size is set to be lower than our initial forecast," said Rajesh Agrawal, coordinator of the Soy Processors Association of India (SOPA).

 

This year's above-average monsoon rain season, the first since 2007, led to initial forecasts of soymeal exports as high as five million tonnes, with expectations for a record soy crop. Exports in 2007 were a record 4.9 million tonnes.

 

Estimates for soy production vary considerably and can depend on timing of the forecast, from planting to harvest.

 

Farmers planted about 14% more land with soy compared to a year ago by the end of the June-to-September monsoon, 23% more than the average of recent years.

 

Taking that bumper acreage into account, the farm ministry's initial forecast was for a record harvest of around 16 million tonnes, but this will be scaled down in subsequent forecasts as the extent of damage to the crop becomes clearer.

 

SOPA last month estimated an output of 12.98 million tonnes as the new soy crop had just started hitting markets, but later on revised it down to 12.23 million tonnes.

 

Last week, due to the damage from heavy rains after the full monsoon ended, the Central Organisation for Oil Industry and Trade (COOIT) revised its own earlier estimate down 4.4% to 10.23 million tonnes. COOIT's forecast excludes beans set aside for use as seed in the next planting season -- usually about two million tonnes.

 

Concerns over damage to the crop have prompted some traders to be conservative in projecting exports for soymeal, a by-product of crushing soy for oil. India's soy products are preferred by Asian buyers due to the absence of genetically modified strains.

 

Late rains in major producing areas could have kept moisture content high in the crop, which would damage the beans badly and reduce protein content.

 

Currently, soymeal available in spot markets contains 47-48% protein. On India's west coast, soymeal quoted US$550-US$560/tonne Free on Board.

 

An Indore-based trader said that high protein soymeal with over 50% protein content will be available in two weeks' time.

 

Uncertainty over quality makes it difficult to forecast soymeal exports, said Atul Chaturvedi, chief executive of Adani Wilmar, the biggest edible oils importer and refiner in the country. But industry executives agreed that, whatever the damage from late rains, exports of soymeal would be higher than last year as they will also benefit from the weak rupee, which touched a record low earlier this year.

 

India exported 3.5 million tonnes of soymeal in 2012-13 with Iran, South Korea, Thailand and Vietnam as major buyers.

 

Meanwhile, domestic demand for soymeal is likely to remain around four million tonnes this year as a slowdown in the Indian poultry industry will keep consumption static at best.

 

The poultry industry, which saw rapid expansion in recent years, had more capacity than it needed last year. While India's consumption of poultry and products is rising sharply as incomes increase and global communications increase awareness of the need for high-protein foods in a balanced diet, farmers built more capacity than they needed last year.

 

That scenario is expected to continue this year, ruling out any increase in demand for soymeal from the domestic industry.