August 22, 2007

 

South Korea feed makers eyeing cheaper Indian soymeal

 

 

As South American feed supplies are coming up at a premium of US$20 to reach US$340 to US$350 a tonne, importers from South Korea are seeking for India's soymeal which is relatively cheaper at US$330.

 

The price difference would force South Korean importers to wait until the next Indian soymeal season which would be available by late October and early November, a trader from an international grain house said.

 

India is expecting to harvest a record soybean crop of 8.5 million tonnes in 2007-08 compared from last season's 7.5 million tonnes.

 

Soymeal, a by-product of crushing soybeans, is an ingredient in animal feed, and the amount of protein sets its price.

 

South Korean feedmakers purchased about 500,000 tonnes of Indian soymeal last year and consumes 2.2 million tonnes of soymeal with imports accounting for 64 percent. The rest of the commodity is bought from local crushers such as CJ Corporation and Shin Dong Bang Corporation.

 

The import cost of South American soymeal was up 20 percent from early this year due to soaring freight costs.

 

Spot voyage fixtures for modern panamax rates for the South American-to-Asia route are hitting US$100 a tonne as massive demand for natural resources in China and seasonal demand for grain continued to pressure tonnage supply.

 

Panamax vessels usually carry 55,000 to 80,000 tonnes of freight, usually grain.

 

Small-Handy vessel rates for the India-to-South Korea route, however, were estimated around US$45 to US$50 a tonne, almost half the price of panamax.

 

Indian soymeal is usually delivered by small handymax, which carries only 10,000 to 20,000 tonnes.

 

An official at a member company of the Korea Feed Association will still snap up Indian soymeal earlier than usual if panamax rates remain at their current level.