September 10, 2008
Asia Grain Outlook on Wednesday: India soymeal demand may remain sluggish
With bumper soybean crops expected in most major producing countries, Indian soymeal demand is flagging, and sentiment is likely to remain bearish - as it is for most grains.
"India has so far sold only around 150,000-200,000 tonnes of soymeal for the new crop, which will be harvested in late September. It's half of what India managed to sell by this time last year," said a New Delhi-based executive of a major oilseeds trading firm.
Soy crushers in India have priced their product too high for the world market, and are now finding it difficult to sell, he said.
India is the leading exporter of soymeal in Asia.
The executive said Indian traders are offering new crop soymeal at around US$400/tonne, but international buyers aren't willing to pay more than US$380/tonne.
If the U.S. - another major global soybean producer - crop continues to progress smoothly, soymeal prices globally could fall to around US$300/tonne in the next few months, he added.
Both India and the U.S. are expected to post bumper crops.
Meanwhile, the world's biggest soybean importer, China, is also expecting a bumper harvest this year, which will either cap its soybean imports at 2007 levels of 35 million-36 million tonnes, or push it lower.
The only bullish news for soybeans so far is a drought in Argentina, a major soybean grower.
However, Dorab Mistry, a renowned edible oils analyst, said Wednesday the drought might actually increase soybean acreage in Argentina, by displacing the more water-intensive wheat crop in many areas.
Mistry added that good weather conditions are prevailing for crops around the world, which is bearish for agricultural prices.
"Hurricane Gustav brought much-needed moisture to parts of the U.S. Midwest and the Indian monsoon also gave some relief to parts of the Indian oilseed belt," said Mistry, adding that Australia's wheat and rapeseed growing areas are also getting much-needed rainfall.
"Uniformly good weather is a rare but fortunate occurrence and as long as this remains, the outlook must remain somewhat bearish," he said.
In other grains, rice exports from Thailand, the world's largest exporter, haven't been impacted by political turmoil over the past several weeks, said Chookiat Ophaswongse, president of the Rice Exporters Association of Thailand.