China buys Indian soymeal at record prices

In a remarkable turn of fate, Indian exporters are signing fresh soymeal export contracts at record prices of $310 to $330 (Rs12,550 to Rs13,360) per tonne, including cost and freight, to destinations in South East Asia and China.

This comes in contrast to the sharp decline in soybean meal exports for the April to August 2007 period, which were lower at 538,000 tonnes from 796,000 tonnes in the same period last year, mainly because of lower Chinese offtake. August was the worst month, when exports were at 122,000 tonnes, half of last year''s 254,000 tonnes, with Chinese traders hammering the Indian market.

According to the Central Organisation of Oil Industry and Trade, this is the highest ever price for soymeal contracts. India has already contracted to export close to 500,000 tonnes of soymeal from the new crop, which will be harvested in October. Indian domestic demand for soymeal is 2 million tonnes, while the country exports around 3.5 million tonnes.

The US and China''s loss is India''s gain. By a strange coincidence, freight costs are up, while simultaneously, production has slumped in both the US and China. This has boosted Indian soymeal exports this year. Little wonder that Indian soybean exports are expected to be 10 to 15 per cent higher this year.

India''s soybean crop is also expected to be15 per cent higher than the 7.6 million tonnes (mt) grown last year. China''s projected crop is 14.5 mt compared with 16.2 mt, while the US will produce 71.5 mt compared with 86 mt last year. World soybean production is projected to touch 222 mt this year, down from 236 mt last year.

The landed cost of soybean meal from India to South East Asian countries is $40 per tonne, compared to $100 from Argentina or the US, owing to high freight costs for bulk dry cargo.

Chinese pigfeed manufacturers prefer to buy from India, not only because of proximity, but also because Indian soymeal contains 3 to 4 per cent more protein. Besides, they get a benefit of $50 per tonne if they directly import soymeal rather than soybeans. Soybean comprises 82 per cent meal and 18 per cent oil.