February 8, 2011

Thailand to allow soymeal exports to ease glut

Thailand's soy processors will be permitted, as a short-term measure, to export soymeal to reduce a glut which resulted from high soy oil production.


The meal is a by product of soyoil production, which has surged in recent months to meet demand from consumers for cooking oil in the face of a severe shortage of palm oil.

Commerce Minister Porntiva Nakasai said the soy meal surplus had pushed down prices by THB1-2 (US$0.03-$0.06) per kg to THB13 (US$0.42).

World soy meal prices, meanwhile, have risen to 18 baht a kilogramme from THB15 (US$0.49) at the end of last year, mainly because a drought has reduced output in top producer Argentina.

The Soy and Rice Bran Oil Processors Association has sought government permission to export about 250,000 tonnes of meal over the next three to four months to pare down stocks, said president Vichit Vitayatanagorn.

He said producers had been unable to offload the meal locally because animal feed producers are reluctant to purchase it. Feed makers blame government regulations intended to protect soy farmers.

Local animal feed producers are obliged to buy domestic soy meal at the world market price plus a 2% tariff, said Pornsil Patchrintanakul, president of the Thai Feed Mill Association.

Soyoil producers had asked for the 2% tariff earlier, saying they had to pay soy farmers at prices guaranteed under a crop insurance scheme.

However, Mr Pornsil maintains the 2% tariff is no longer needed as most of the soy used domestically is imported.

Thailand has to import soy as local production is not sufficient to meet local processors' demand, mainly from the cooking oil industry. Last year, the country imported 1.87 million tonnes of soy, mainly from Brazil, Argentina, and the United States.

The Agriculture Ministry forecasts imports will rise to more than 2 million tonnes this year.

Cooking oil manufacturers can also earn income from selling soy meal. However, futures prices of soy in foreign markets have been on upward trend, averaging US$481.40 a tonne in December compared with US$378 in 2009.

Current prices have exceeded the previous record of US$453 a tonne in 2008, when more crops were diverted for making fuel at a time when world crude oil prices were soaring.

Thailand uses about 3 million tonnes of soy meal in the livestock industry, of which 972,000 tonnes are produced locally.

The government allows imports of soy meal for use in animal feed on condition that producers also buy soy meal from locally produced beans at no less than THB11.25 (US$0.37) per kg. The condition is intended to protect local growers, who produce 200,000 tonnes of soy a year.

Importers pay a 2% tariff on soy meal imports under a quota system approved by the World Trade Organisation.

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