November 14, 2005
India re-negotiating soymeal export deals with China
Indian traders are re-negotiating recent deals with Chinese buyers to sell about 50,0000 tonnes of soymeal and may agree on rates lower than contracted earlier, in wake of a fall in global prices, industry officials said Saturday.
The officials said there have been no instances of Indian soymeal shipments being rejected on quality grounds and the Chinese were only bargaining over prices.
"India has sold about 250,000 tonnes of soymeal to China since last month. 100,000 tonnes have already been delivered and no quality issue cropped up," said Rajesh Agrawal, Chairman, Soybean Processors Association of India or SOPA, an industry lobby group.
He said the fate of around four cargoes of a total volume of more than 50,000 tonnes yet to be shipped seems uncertain as original contracts were for sale at over US$240/tonne, cost and freight, a price which the Chinese buyers are seemingly no longer prepared to pay.
"The Chinese market is price sensitive and previously there have been cases of their backing out on purchases for soymeal in the event of global prices declining by over US$10/tonne after inking of a deal," said Prem Agrawal, managing director, Krishna Oil Extractions, an India-based oil manufacturing and trading firm.
It has been learned that trading firms are now renegotiating the deals in line with the current prices, he said.
Traders said international soymeal prices have declined by around US$15/tonne in the past few weeks on upward revision in the US soy crop estimates for the current year and this must be in the minds of Chinese buyers.
They said Indian soymeal, which was until recently selling at US$210/tonne, free alongside ship, or FAS was now being offered at US$196/tonne, FAS.
The likelihood of a good soybean crop in the US this year has proved a dampener for prices but a course correction is due shortly, said Sandeep Agrawal, director, Gujarat Ambuja Exports.
He said fears of low demand for soymeal for use as poultry feed-due to the killing of thousands of birds suspected of bird flu-were unfounded as poultry animals multiply very fast.
