Indian soymeal exports to ease Asia’s grain supply

NEW DELHI/SINGAPORE: India is on track for a bumper soybean crop this year, thanks to the revival of monsoon rains, which will ensure plentiful soymeal supplies to Asia and ease concerns sparked by a devastating US drought.

While the soybean crop in the United States, the world’s top exporter, has been decimated by the country’s worst drought in 56 years, India is on track for above-average yields, with rains over the past three weeks providing much-needed soil moisture.

The prospects of higher supplies from India, Asia’s top soymeal exporter, could pile pressure on the benchmark Chicago soybean market, which is on track for its first decline in four months.

“India’s soybean crop looks superb as rains have been so good in all the areas,” said Atul Chaturvedi, chief executive at Adani Wilmar Ltd, one of India’s top farm goods exporter. “I see no reason why the crop shouldn’t be better than last year.”

Most traders and analysts expect India to at least match last year’s soybean output of 10.6 million tonnes, leaving it with at least 4.0 million to 4.5 million tonnes of meal for export to its traditional customers in Asia. Some forecasters project the Indian bean crop as high as 11.5 million tonnes.

There had been fears that poor rains in June and July, the first two months of India’s monsoon season, would exacerbate the supply tightness due to lower production in South America this year and the drought in the United States.

But the monsoon rains have been reviving since the last week of August with three straight weeks of above average rainfall until Sept. 12, ensuring healthy downpours over the soybean growing areas in central India. The annual rains are vital for the 55 percent of India’s farmland that is without irrigation.

Global soy supplies: Still, India’s soymeal exports will help only to a certain extent, with lower oilseed output in the United States, Brazil and Argentina, the three countries that account for 90 percent of the world’s soybean exports.

The US Department of Agriculture in its monthly crop report last week forecast ending stocks next summer to be the lowest in nine years and the stocks-to-use ratio at the lowest in nearly five decades.

India itself grappled with tight feed grain supply in July and August that forced the government to abolish import duty on oilmeal after domestic soymeal prices soared 110 percent to an all-time high of $850 between May and July amid a drought.

But prices have since eased, following rains across the nation’s oilseed belt in central Madhya Pradesh and western Maharashtra states.

In Southeast Asia, Indian soymeal is quoted at $650 a tonne, including cost and freight, compared with $675 a tonne for South American meal and $695 a tonne for US cargoes.

US soybean futures tumbled by the daily trading limit on Monday, posting their biggest percentage drop in nearly a year but that was more to do with anecdotal accounts of better-than-expected harvest yields in the US Midwest farm belt.

Indian soymeal exports have been capped by buyers’ reluctance to commit to forward deals amid volatile markets. “They just want to book cargoes one or two months in advance,” said one Singapore-based trader. “Now that the Indian crop looks good, what is the hurry to make advance purchases?”

India has sold some 200,000 to 250,000 tonnes of new-crop soymeal for shipment between October and December, mainly to importers in Asia, such as Thailand, Japan, South Korea, Vietnam and Indonesia.

India will continue to sell soymeal to sanctions-hit Iran as a payment mechanism with the Middle East country was in place, traders said. “Iran and the European Union will be on our export radar,” said Rajesh Agrawal, an official of the Soybean Processors Association of India.

Source : dailytimes.com.pk