December 11, 2003



South Korea & Japan Switch To Indian Soymeal


An absence of Chinese soymeal offers is forcing South Korea and Japan, two of Asia's leading importers of the feed ingredient, to turn to India, which still has plentiful supplies.


For Indian protein exporters, this window of opportunity to snap up contracts is going to stay at least until end of March next year when soymeal from the new South American soybean crop starts to trickle in.


Chinese soymeal sales to Japan in the January-October period were 432,105 tons, a 14.8% drop over the same year-ago period, while China sold 95,368 tons to South Korea in the same months, a 27.9% decline, Chinese customs data shows.


China is struggling to rein in rising domestic food prices amid eroding grain stocks.


"Indian exporters are keeping an eagle's eye on these two markets as they know they can get the best prices from them," said one trader. "We should hear some sales every now and then."


Just over two months into the new season, Indian sales are already riding high. The country has snapped up deals to export around 1.8 million tons in the 2003/04 (October-September) season compared with 1.4-1.5 million in the same year-ago period.


India normally exports about two million tons of soymeal a year. But thanks to a record soybean crop of 6.85 million tons this year, it still has at least another one million tons to offer. India produced 4.3 million tons of soybeans last season.


"India still has more than 1.2 million tons to offer and our exports will cross 3.0 million tons," Davish Jain, a leading soymeal processor, told Reuters from the central Indian city of Indore, the hub of the country's soymeal trade.                               


While one can buy Indian soymeal at $277-$278 a ton, cost-and-freight (C&F) Southeast Asia, U.S. high-pro soymeal was quoted at around $312 a ton. Old crop low-pro Argentine meal was offered around $284 a ton -- all for January shipments, traders said.


Inquiries Flowing 


Japan imports slightly above one million tons of soymeal for animal feed each year, while South Korea bought around 1.5 million tons of soymeal last year.


"We have done well with Japan. They have bought 225,000 to 250,000 tons from us and we expect more sales, although it is difficult to say how much they will buy from us," one Ahmedabad-based exporter said.


Traders said South Korea would be shifting to South American supplies only after ensuring that no more Indian cargoes were available. Until then, steady business was expected.


"South Korea is one of our favourite markets and we do not see any threat from Argentina," said Atul Chaturvedi, vice president of Adani Exports Ltd. "We are getting good inquiries from South Korea."


But the only headache for Indian soymeal exporters currently was the problem of transportation. Traders said state-run railways had reduced the number of trains allocated to move soymeal from processors to ports since it was giving priority to distribute wheat and rice within the country.


"A lot of meal is lying with the processors and we expect delays in meeting export deadlines," one exporter said.


Out of the total outstanding contracts, India has so far physically moved only 600,000 to 700,000 tons of soymeal.

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