November 22, 2013

In the second half of the financial year, India's soymeal exports will slow, brought about by the poor quality of soy seed for crushing and higher prices, making it unviable for exports.

Players estimate a 20-25% fall in exports this year. The export during April-October was up 15% at one million tonnes from 0.9 million a year ago, according to The Solvent Extractors' Association of India (SEA).

In 2012-13 exports, three-fourths of oilmeal exports were 3.43 million. Lower supplies could force Japan, Iran, Indonesia and Thailand to buy spot cargoes from other suppliers, like Vietnam.

The beans were damaged due to late rains which have kept moisture content high in the crop and reducing the protein content. Prices in the domestic market went up as farmers were holding on to stock. Crushing is down 50% this season.

Soymeal prices are US$20-30/tonne higher than others in the exports market. India's average free-on-board (a trade term requiring the seller to deliver goods on board a vessel to the buyer) export price, which includes transportation cost, for September was US$510. It has gone up to US$540 in October and to US$555 in the current month. The US, Brazil, Argentina and Portugal are quoting this at US$530-535.

Prices have gone up 5.6% to INR33,010 (US$524) a tonne in line with the bean prices, up 14.1% in two months to INR3,864 (US$61) a quintal.

"Soymeal is of low quality. This will impact realisations of crushers," said B V Mehta, executive director, SEA.

India may be able to meet commitment of up to December, but has started to lose orders. Bean production this year is pegged at 10 to 1.5 million tonnes. Arrivals on Madhya Pradesh's spot market were lower. Daily arrivals over the country are 600,000 bags.