February 7, 2005



Asia eyes economic alternative to import US soymeal


Small feed mills in Asia have discovered an economical alternative to obtain soymeal supplies in the absence of ready stocks from Indian - using the humble ship container to bring in the feed ingredient from the United States.


The latest trend in the protein market may not only help to shift some Asian demand to the United States, it might also prompt Indian farmers to start selling beans to ensure that they don't miss out on sales, trade officials said.


Many Asian feed millers, which make commercial feed using soymeal for poultry, beef and the hogs industries, cannot normally afford to bring in panamax-sized ships which ply the seas with huge cargoes of some 60,000 tons from the Americas.


So in the peak November to March period they normally wait to buy from India in boat loads of as low as 10,000-12,000 tons.


But with a sharp rise in demand from feed makers in India and reluctance of its farmers to sell soybeans at current low levels, importers in Indonesia, Vietnam and Malaysia have been snapping US soymeal shipped in containers, which can carry a payload of 20 to 21 tons. And traders said more deals could be in the pipeline.


"Contracts are being written as we speak," according to John Lindblom, regional director for Southeast Asia of the American Soybean Association, referring to US soymeal deals for shipment in containers to Asia.


In recent weeks Indonesia has bought close to 25,000 tons of US soymeal for shipment in containers. Protein importers in other Southeast Asian nations were also sniffing around for cargoes, trade officials said.


A feed mill eyeing to buy 1,000 tons of soymeal has to book about 50 containers. Traders said Indonesia was bringing in about 3,000-8,000 tons of soymeal per shipment, while others importers had so far been bringing in 5,000 tons per shipment.


"Indian soymeal is quite difficult to buy now. US soy in containers is working out quite well," said an Indonesian trader.


In addition, it is also ideal for importers such as Vietnam, which does not have the port infrastructure to efficiently handle panamax-sized cargoes.


Freight cost woes: With global freight rates currently at high levels, the cost of shipping soymeal from South America to Southeast Asia in a panamax-sized cargo could be anywhere between $60-$70 a ton.


Traders said container freight from the United States was about $10-$20 lower, depending on the port of origin.


"Also, the landed cost of US meal in containers works out to about $10 a ton cheaper, compared with bulk shipments from the same origin," said one trader. "But the biggest advantage in container shipping is that even somebody looking for 1,000 tons of soymeal from the United States can also buy."

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