September 22, 2011
Southeast Asia's soy crushing down due to cheaper soymeal
Due to low margins and availability of cheaper soy meal, soy crushing mills in SE Asia are operating in low volumes, trading executives and analysts said Wednesday (Sep 21).
If the trend continues, it could result in reduced soy imports in the fourth quarter and beyond by SE Asian nations, which collectively import around 10.5 million tonnes soymeal and 4.5 million tonnes soy a year.
John C. Baize, a Washington-based commodities analyst and consultant said that many animal feed processors prefer to important cheaper soy meal from Argentina rather than buy meal from locally processed soy.
Argentine soymeal is available at a US$25-US$30/tonne discount to US soymeal, and India has started making sales at even lower prices, said an importer from Vietnam.
A processor in Malaysia's Penang state said soymeal from locally crushed, imported soy can cost around US$470-US$480/tonne while soymeal from Argentina is available on a delivered basis around US$435/tonne.
South Korea's largest feed miller, Nonghyup Feed Inc., bought Indian soymeal at US$403.23/tonne, cost and freight for December shipment, and sales at similar prices are taking place in Southeast Asia as well, traders said.
According to food and feed processors in Vietnam and Indonesia, soymeal is already oversupplied, meaning imports of both soy and soymeal will likely be sluggish.
Traders in southern Vietnam bought a lot of soy meal in July and August and even had to sell some of it at a US$20-US$25/tonne discount to market rates, suffering losses and further reducing demand for output from local crushing plants, a Ho Chi Minh City-based trader said.
Two soy crushing plants with combined daily crushing capacity of 4,000 tonnes started operations this year in Vietnam, SE Asia's largest importer of soymeal to date.
A Singapore-based executive said that soy processing mills are calculating crushing margins on a daily basis and operating only on days when they expect some earnings.