The Hindu Business Line : Soyameal bucks general export trend on Latam factor

New Delhi, Jan. 6 At a time when exports are in general floundering, here is an exceptional story. Soyabean meal shipments from the country have registered an almost 21 per cent jump during December.

According to the Soyabean Processors Association of India (SOPA), meal exports amounted to 6,65,304 tonnes in December 2008, as against 5,51,382 tonnes in the same month of the previous year.

Global meltdown

Cumulative exports for the current fiscal till December stood at 30,85,559 tonnes, representing a 53 per cent increase over the 20,16,450 tonnes of April-December 2007-08. While exports grew by just 7.8 per cent during October-November – the initial months following the global financial meltdown – December has seen a complete turnaround.

The trade attributes this mainly to dry weather in Brazil and Argentina, the biggest soybean producers after the US. Despite some recent rainfall in southern Brazil, the weather outlook in key soyabean growing regions of Latin America continues to be unfavourably warm. This, along with the recovery in world crude prices, has led to bullishness in the crop.

The March soyabean contract at the Chicago Board of Trade (CBOT) is currently trading at around $10 a bushel, after touching an 18-month low of $7.7625 on December 5 and the all-time-high of $16.3675 reached on July 3 (one bushel equals 27.216 kg).

“Most overseas buyers were holding very low inventories anticipating prices to dip further in the wake of the meltdown. But with reports of crop damage coming in from Brazil and Argentina, there has been a sudden demand for Indian soyameal and lot of short-covering,” said Mr Rajesh Agarwal, spokesperson of the Indore-based SOPA.

Indian meal is quoting now at around $325 a tonne (free-on-board Kandla/Bedi), as against $260 levels a month ago. Thailand, Singapore, Vietnam, Japan, South Korea, Malaysia, Taiwan, Indonesia, China and the United Arab Emirates are the main destinations for Indian meal.

During the 2007-08 oil year (October-September), the country exported 48.88 lakh tonnes (lt) of soyabean meal valued at Rs 7,332 crore.

Growers Benefit

The significant thing about the revival in exports has been that it has also benefited soyabean growers. Prices in the mandis have shot up to Rs 2,000 a quintal, after falling to Rs 1,450-1,500 in November – a shade above the official minimum support price of Rs 1,390. Prices have also been buoyed by the Centre’s November 18 decision to clamp a 20 per cent import duty on soyabean oil.

According to a trader, an important reason for the crop prices firming up was short-covering by the processors themselves. “Most solvent extraction plants were holding stocks of just a week or 10 days, as against one to two months at this time last year. They were not buying much because of poor export orders. But with the situation changing, they too are now trying to build up stocks, which is pushing up crop prices,” he noted.

SOPA has estimated the size of the country’s soyabean crop this year at a record 108.18 lt. But out of this, barely 50 per cent has so far arrived in the markets, with farmers staggering sales in anticipation of higher prices. “They refused to bring their crop because the initial mandi prices did not meet their expectations. Neither were processors interested in buying much. But now, it looks like the growers’ gamble of holding back their crop has paid off,” he pointed out.

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