October 9, 2009

India's soymeal exports may halve in the December quarter of 2009 due to lower demand from Asian countries resulting from reduced expenditure on animal feed.

 

The global economic slowdown has affected the animal feed trade, with exports declining 54.55 percent to 1.6 million tonnes in the first eight months of this year.

 

Indian exporters have so far signed contracts for shipments of 650,000-700,000 tonnes of soymeal to China, Japan, Vietnam, South Korea, Indonesia and Thailand during the last quarter of the current financial year. The exporters had shipped 1.39 million tonnes and 1.2 million tonnes in the same period of 2008 and 2007, respectively, according to data by the Solvent Extractors' Association (SEA).

 

Traders said contracts were signed two months in advance last year, thus escaping the negative impact of the Lehman Brothers failure in September 2008. However, importers later abstained from signing new contracts, which led to a sharp decline in exports since January this year.

 

India exports more than 70 percent of its soymeal.

 

Importing countries have sharply reduced their animal feed investments in order to mitigate the impact of the global economic slowdown, and the trend is likely to continue until the global economy fully recovers, said an exporter.

 

Local traders are also holding stocks in large quantity in anticipation of higher prices during the lean sowing period. As a result, crushing mills could not secure enough stock this season, leading to lower meal production this year, the exporter said.

 

Still, India's soymeal production is expected to increase during the third quarter as harvesting of the current kharif crop has begun. According to industry estimates, there is a carryover stock of 800,000 tonnes.

 

India's soy production is estimated at around 10 million tonnes this year, up from 8.9 million tonnes last year.