Soyameal exports are likely to drop in the marketing year through September owing to a bigger harvest of soya bean in South America, which could make Indian supplies less competitive despite a weak rupee, trade executives said on Wednesday.
India, the world’s fourth-largest soyameal supplier, exported 5,10,698 tonne in December, down 34% from a year before, according to Mumbai-based Soybean Processors Association of India (SOPA). Exports in the first three months of the marketing year, too, crashed by 27% to 10,78,852 tonne. Some trade executives expect exports to drop to 3.5 million tonne in 2012-13, compared with 3.62 million tonne a year ago. These data do not include supplies to Nepal, Pakistan and Bangladesh by rail or road.
?Lower arrival of soya beans in the domestic market and falling profitability in crushing have affected exports so far. Overseas demand has also been sluggish as the global market is expecting adequate arrivals of the American crop over the next one month. Moreover, if the weather remains conducive, South America will harvest a bigger crop in the coming months. So, overseas buyers are delaying purchases, waiting for the South American crop to flood the market and drag down soyameal prices. Therefore, the current purchases are just need-based, and not for building inventory,? said Rajesh Agrawal, co-ordinator, SOPA.
?Farmers are holding back soya bean stocks, expecting prices to soar in the coming weeks, which is affecting supplies in the market,? Agrawal said. However, he expects exports to climb after April, when domestic supplies of soya bean would improve. ?Until then, the shipments may continue in the range of 4,00,000-5,00,000 tonne a month,? Agrawal added.
Lack of export demand has dragged down soyameal prices by 8% since October. Soyameal prices were ruling in the range of $513-$517 a tonne, freight-on-board, on Wednesday.
Soya bean is crushed into soyameal for animal feed and into soya oil for cooking. Soyameal is added to poultry feed as a form of protein to boost birds? growth. India, which typically exports around 70% of its annual production, will likely produce a bumper 11.34 million tonne in 2012-13 driven by good planting, compared with 10.65 million tonne last year, according to SOPA’s estimate.
India competes with Brazil and Argentina for soyameal exports to countries including Japan, Vietnam, South Korea and China. However, suppliers in India have an edge over their South American rivals in terms of freight differential due to the country?s proximity to key buying nations, the executives said.
However, a bumper South American crop would depress global prices and severely dent India’s competitiveness.
Senior trade executives expect a drop of $50-$60 a tonne in soyameal prices in the next couple of months.
Brazil’s soya bean crop in early 2013 could cross the 81-million-tonne mark, compared with a 66.4 million tonne a year ago. Brazilian soya bean exports are expected from February.
