Kang Shinhye / Reuters
Seoul: Recent rallies in the import costs of South American soymeal may cause South Korean feed makers to aggressively seek cheaper Indian meal, traders said on Tuesday, 21 August.
“Feed importers aren’t keen on South American supplies, which were offered at a premium of $20 a tonne over Indian cargoes,” said a trader at an international grain house.
“They will wait for Indian soymeal season, which will start soon.”
Indian soymeal from the new soybean crop would be available by late October and early November.
South American soymeal was recently offered at $340-$350 a tonne, including cost and freight, while Indian meal from the old crop was trading at $330.
“Prices for the new Indian crop are expected to be around $320 a tonne, helped by a good harvest,” said another trader.
India is expecting to harvest a record soybean crop of 8.5 million tonnes in 2007-08 from last season’s 7.5 million tonnes.
Soymeal, a by-product of crushing soybeans, is an ingredient in animal feed, and the amount of protein sets its price.
South Korean feedmakers bought about 500,000 tonnes of Indian soymeal last year.
South Korea annually consumes about 2.2 million tonnes of soymeal for feed, importing 64% and buying the rest from local crushers such as CJ Corp. and Shin Dong Bang Corp.
The import cost of South American soymeal was up 20% from early this year due to soaring freight costs.
Spot voyage fixtures for modern panamax rates for the South American-to-Asia route are hitting $100 a tonne as massive demand for natural resources in China and seasonal demand for grain continued to pressure tonnage supply.
Panamax vessels usually carry 55,000-80,000 tonnes of freight, usually grain.
Small-Handy vessel rates for the India-to-South Korea route, however, were estimated around $45-$50 a tonne, almost half the price of panamax.
Indian soymeal is usually delivered by small handymax, which carries only 10,000-20,000 tonnes.
“South Korean importers will snap up Indian soymeal earlier than usual if panamax rates remain at their current level,” said an official at a member company of the Korea Feed Association.