Soymeal exports likely to fall on bean quality, higher prices

Poor quality soybean seed for crushing and higher prices making it unviable for exports

The momentum seen in the exports of soymeal will slow in the second half of the financial year. Reasons: Poor quality of bean and higher prices.

Players estimate a 20-25 per cent fall in exports this year. The export during April-October was up 15 per cent at one million tonnes from 0.9 million a year ago, according to The Solvent Extractors’ Association of India (SEA).

In 2012-13, exports, three-fourths of oilmeal exports, were 3.43 million. Lower supplies could force Japan, Iran, Indonesia and Thailand to buy spot cargoes from other suppliers, like Vietnam.

Late rains have kept moisture content high in the crop, damaging the beans and reducing the protein content. Prices in the domestic market went up as farmers were holding on to stock. Crushing is down this season 50 per cent.

Soymeal prices are $20-30 a tonne higher than others’ in the exports market. India’s average free-on-board (a trade term requiring the seller to deliver goods on board a vessel to the buyer) export price, which includes transportation cost, for September was $510. It has gone up to $540 in October and to $555 in the current month. The US, Brazil and Argentina and Portugal are quoting this at $530-535.

Prices have gone up 5.6 per cent to Rs 33,010 a tonne in line with the bean prices, up 14.1 per cent in two months to Rs 3,864 a quintal.

“Soymeal is of low quality. This will impact realisations of crushers,” said B V Mehta, executive director, SEA.

India may be able to meet the export commitment of up to December, but has started to lose orders. Bean production this year is pegged at 10 to 1.5 million tonnes.

“Many that have not been able to fulfill commitments from India and with operations in China have exported from there. This oil year, exports are expected to be lower than last year by one million tonnes,” said Neerav Desai, partner, GGN research.

“Buyers have cancelled their orders,” said Ramesh Kotecha, a Mumbai-based soymeal broker.

Arrivals on Madhya Pradesh’s spot market were lower. Daily arrivals over the country are 600,000 bags.

“Usually, during this time, all crushers work at full capacity. But they are working at half-capacity,” said Rajesh Agrawal, chief coordinator, Soybean Processors Association of India.