BackPoultry-feed sales by India seen slumping to lowest since 1990s
Soybean-meal exports from India may plunge as importers switch to cheaper supplies from South America
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Mumbai: Soybean-meal exports from India, Asia’s largest shipper of the poultry feed, may plunge this year to the lowest level in more than two decades as importers from Iran to Vietnam switch to cheaper supplies from South America.
Sales are set to drop as much as 29% to 1.5 million tonnes in the year that began on 1 October from 2.1 million tonnes a year earlier, according to Davish Jain, chairman of the Soybean Processors Association of India. That would be the lowest since at least 1992-1993, according to group data.
Supplies from India cost more than global rates after benchmark meal futures traded in Chicago dropped 30% in the past year on record global harvests. Iran is buying less because an easing of international sanctions means it can get supplies from Brazil and Argentina, Jain said. The government support price in India is above the world market and farmers haven’t been selling beans for processing, he said.
“India is totally out-priced and the world is really not looking at India as a regular or genuine supplier now," Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd, said in a phone interview on 26 March. “The farmers are not releasing the beans in the market in the hope of better prices."
Soybean meal was offered at $445 a tonne at Kandla port in India on 26 March, according to the Solvent Extractors Association of India, while futures traded at $323 per 2,000 pounds on the Chicago Board of Trade the same day. Processors crush beans into meal for livestock feed and cooking oil.
Freight rates
Sales from India plunged 71% to 502,958 tonnes in the five months through February from a year earlier as importers turned to Brazil, Argentina and the US, Jain said. Shipments to Iran, the top buyer in the previous year, fell to 184,800 tonnes from 510,535 tonnes, data from the group show.
India has shipped soybean meal mainly to Iran, France, Indonesia and Myanmar this year for use in poultry feed, according to B.V. Mehta, executive director at the Solvent Extractors Association of India.
A decline in freight rates because of the slump in oil prices made supplies from Latin America cheaper, Jain said. The Baltic Dry Index, a measure of commodity shipping costs, is down 53% in the past year as Brent crude lost 46%.
Shipments of Indian soybean meal will fall to 1.65 million tonnes in the 12 months through September from 2.74 million tonnes a year earlier and compared with a high of 5.29 million tonnes in 2007-2008, according to US department of agriculture data. They dropped to 1.51 million tonnes in 2002-2003, they show.
Record crop
Rising domestic demand is the only silver lining, Jain said. Consumption of soybean meal, flour and other soybean-based products is expanding at 10% to 15% annually and is estimated at 5 million tonnes this year, he said.
Prices of soybeans, meal and oil have declined as the global oilseed harvest climbs 11% to a record 315.06 million tonnes this year, according USDA estimates. While the crop worldwide expands, output in India will probably drop 3.5% to 9.17 million tonnes in 2014-2015, according to the Central Organization for Oil Industry and Trade.
Farmers “made money by holding onto the beans in the last few years," Chaturvedi said. “This year the world is awash in beans, so I don’t think history will probably help them out." Bloomberg
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