October 22, 2003



India's Soymeal Prices Will Rise Further Despite Good Harvest


Despite a good soybean harvest, prices of Indian soymeal are likely to rise further, following strong international prices amid fears of a smaller U.S. soybean crop this year, a leading industry official announced on October 21.


Still, Asian feed makers will continue to buy Indian soymeal, as it is currently cheaper than other origins. In addition, exports are likely to more than double in the current marketing season, said Rajesh Agrawal, chairman of India's Soybean Processors Association, or SOPA.


"Indian prices will follow international prices. The main reason we are seeing high international prices is the (expectation of a smaller) U.S. (soybean) crop," he said.


SOPA is a national lobby group representing soybean processors and exporters in India.


"There's a gap between Indian soymeal prices and U.S (or) South American prices, so we still have room to move up," said Agrawal.


Forecasts of lower-than-average soybean production in the U.S., coupled with better demand, have boosted U.S. soy futures prices in recent weeks, with analysts seeing further boost to the soy market.


In its latest October report, the U.S. Department of Agriculture estimated the average national soybean yield this year to be 34 bushels per acre, the lowest average in 10 years. U.S soybean production is forecast at 2.468 billion bushels in the September 2003 to August 2004 marketing year, down 281 million bushels from 2002-03.


"And you also have to monitor the South American (soybean) crop. If something happens, and Brazil and Argentina see less than 60 million and 37 million (tons, respectively), prices will go up higher," said Agrawal.


The USDA has estimated Brazil's soybean crop at 60 million tons and Argentina's at 37 million tons. Both hit record levels, for the October 2003 to September 2004 marketing year. Brazil and Argentina follow a different marketing year.




Indian soymeal is currently priced around US$233-US$234 a ton, free alongside ship, up sharply compared with deals fixed in the range of US$185- US$200/ton, FAS, reported in late August.


Despite the higher prices, demand for Indian meal has been steady, as meal from other origins was quoted even higher.


China, for example, hurt by high domestic meal prices, bought 150,000 tons of Indian soymeal for December shipment recently, around US$280-US$283/ton, cost and freight.


By comparison, South American soymeal was offered around US$300/ton, while Chinese soymeal was quoted around US$320/ton, C&F Asia.


"But there's so far no news that China is negotiating to buy more Indian soymeal," said Agrawal.


He said, however, that the Pakistan¡¯s soymeal market look promising.


"There's demand from Pakistan, (although) we haven't sold them any from the new crop so far. We sold them 30,000 tons last year, after a two-and-a- half-year gap. We can easily sell them 200,000-300,000 tons this year," said Agrawal.


India has committed 1.2 million-1.3 million tons of soymeal for export this season, mostly to Southeast Asia, said Agrawal.


The country is likely to export 3 million tons of soymeal in the October 2003 to September 2004 oil marketing year. This forecast is more than double the 1.3 million tons India exported in the previous year.


A good 2003-04 soybean crop, estimated around 6.8 million tons following good monsoon rains this year, will increase meal availability for exports, said Agrawal. He said the soybean crop estimate is based on a detailed post- harvest survey.


India produced 4.5 million tons of soybeans last year.


In early October, the Indian government forecast the 2003-04 soybean crop at 7.1 million tons, while another edible oil mills lobbying group, the Central Organization of Oil Industry and Trade, has forecast a crop of 6.03 million tons.


Because of the good soybean crop this year, the Indian soymeal export season may last up to May or June 2004. India normally starts exporting soymeal in November, with exports generally slow down by March or April.
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