January 6, 2004

 

 

India Soymeal Prices To Increase

 

Soy meal prices in India are likely to rise in the near term following increased demand for exports arising from the mad cow case in the United States.

 

Currently, the outbreak has made Far-East Asian countries turn to India for soy meal with a 15,000-tonne deal being struck with Japan at $310 a tonne a couple of days ago.

 

"We will know the real effects of the disease on soy meal this week as markets in Far-East and South-East Asia have opened only today," said Mr Rajesh Agrawal, Chairman, Soyabean Processors Association of India.

 

Demand for soy meal from the country was good and adequate stocks were available. Also, soybean supply was satisfactory, he said.

 

Anticipating renewed demand for soy meal, soybean prices jumped to Rs 16,200 a tonne on Monday from Rs 15,700-15,900 tonne during the weekend. On the other hand, soy meal prices have increased to $260 a tonne f.o.b from around $252. In rupee terms, it is ruling at Rs 11,600-11,700.

 

"South-East Asia has not covered its demands for February and March. That's something to watch out for," Mr Agrawal said.

 

"The demand could be 5-7 lakh tonnes (totally) for these months," he said.

Already, contracts have been signed for exporting close to two lakh tonnes of soy meal.

 

The Solvent Extractors Association of India Secretary-General, Mr B.V. Mehta, said in the short term, demand for soy meal could go up if bovine/animal meal, made from animal waste, is banned by the US.

 

"If any decision is made to slaughter the animals, then there could be a rise in demand for soy meal in the short term. But we will also have to see the long-term effects," he said. "Right now, it is too early as it is hardly two weeks after the outbreak has been reported."

 

In 1989, when the disease broke out in the UK, millions of cattle were destroyed. As a result, there was a fall in demand for soy meal in the middle of 1990s.

 

"We will have to study the effects closely from all angles," Mr Mehta said.

 

The 1989 outbreak led to 137 deaths in the UK. The disease re-appeared in 2001 in Europe but it was brought under control quickly without much harm to human beings.

 

The Solvent Extractors Association estimates oilmeal exports to be around 35 lakh tonnes this fiscal as against 18.9 lakh tonnes last year. Of this, soy meal exports are expected to be around 25 lakh tonnes.