September 17, 2007

 

Indian soymeal sharply up on good demand, favourable freight

 

 

Indian soymeal prices have risen more than 10 percent during the past two weeks on strong demand from southeast Asian nations, mainly China, and a rise in freight charges that disadvantages more distant rivals Brazil and Argentina, traders and industry players said Friday (September 14).

 

However, prices may slip again as the new crop starts arriving later this month.

 

"These are really good times for Indian oil millers and I'm very hopeful that next year we will manage to export more than 4 million metric tonnes of soymeal," said Prem Agarwal, an oilseed extractor from central Indian city of Indore.

 

Between October last year and July this year, India exported around 3.25 million tonnes of soymeal.

 

India's oilmeal marketing year runs from October to September.

 

Soymeal, the largest component of the Indian oilmeal trade, has risen by $30 per metric ton, free-alongside-ship, Kandla port, to US$311 per tonne since September 1.

 

Rising freight rates have benefited India because of its relative proximity to buyers.

 

"Freight charges have moved up significantly in the last few months and although the actual price of soymeal from Brazil and Argentina is less than India, the high freight has made Indian meal competitive," Rajesh Agarwal, spokesperson of Soy Processors Association of India said.

 

Freight charges from Brazil and Argentina to southeast Asia are around US$100 to $105 per tonne, while from India they are US$30 to US$40 per tonne.

 

"This has worked in India's advantage, as the landed cost (after adding freight) of a ton of soymeal from Brazil and Argentina is around US$373 per tonne, while that from India is around US$350 per tonne, despite meal prices moving up by US$30," another extractor said.

 

As well as favourable trends in freight rates boosting the competitiveness of Indian soymeal, strong demand from Southeast Asia and China is lifting Indian soymeal prices.

 

"In the last 15 to 20 days, China has purchased around 100,000 to 150,000 tonnes of soymeal from India at very good prices," another extractor said.

 

He said that for a big soymeal buyer like China, India is the most favoured source to meet unexpected demand.

 

"Many Chinese buyers have long-term contracts with Brazilian and Argentinean soymeal makers, but they always turn to India when a sudden demand arises, as we can ship soymeal at short notice owing to our geographical proximity," Rajesh Agarwal of SOPA said.

 

Though most industry players expect good returns from soymeal exports in the coming year, the new soy crop may dampen prices over the next couple of months.

 

"Already, we have seen arrivals of around 4,000 bags in the western Indian province of Maharashtra in the last few days and arrivals in the country's main soy growing state of Madhya Pradesh have also started, which could dampen prices slightly in the short term," another extractor said.

 

One bag contains around 90-100 kilograms of soy.