Falling prices to help exports

IN FOCUS/ SOYBEAN

Soybean prices have been on a roller-coaster ride in India, and this is expected to have a major impact on companies using the crop as raw material.

Cheaper soybean prices have led to improved margins for processors as marked prices for branded soybean items has not come donw for most consumers or in markets.

Refined soybean in 10kg packs was selling in Mumbai markets for Rs 392 in mid-November 2004, but has been sliding steadily since then, to Rs 382 in mid-December 2004, then to Rs 375 on January 15, 2005, and finally to Rs 358 on February 15.

In addition, India's soymeal exports, subdued because of soft world prices, could pick up in the coming weeks with domestic soybean prices easing, agencies had reported recently quoting industry sources.

The United States and South American countries have been aggressively marketing soymeal this year while Indian farmers, who got good prices last year have been holding back soybean sales awaiting a rise in domestic prices.

Global soymeal prices had remained depressed by a record US 2004-05 soybean crop and forecasts of a huge harvest in Brazil and Argentina, the world's biggest producers.

Last year Indian exporters got prices close to around $325 a tonne of soymeal.

But this year, overseas buyers are not willing to pay anything more than $205-$210 for Indian supplies as Argentine meal is available at those prices.

Indian traders were not willing to export soymeal at prices lower than $220 a tonne, free-on-board.

Bodies like the Indore-based Soybean Processors' Association of India have indicated that falling prices were leading some farmers to hit the panic button and start liquidating stocks.

Overall, domestic edible oil prices, of which soybean oil is one, have also been easing.

India has harvested a bumper soybean crop of around 7 million tonnes, marginally up from 6.9 million last year but meal exports have not picked up because of low global prices and strong demand from the domestic poultry industry.

Traders told Reuters recently that while no big deals had taken place, global trading agencies had bought up to 20,000 tonnes of soymeal recently to cover up for earlier export deals at prices ranging between $210-212 a tonne free alongside ship.

Exporters could hope to resume shipments only if meal prices went down to global levels.

Traders said the country's soymeal exports could plunge to less than two million tonnes in the marketing year to September, down from 3.4 million tonnes the previous year.

India exports to Indonesia, Thailand, South Korea, Malaysia, Pakistan and Iraq.

India exported 512,000 tonnes of soymeal between October and December, down to nearly half the overseas shipments in the corresponding period of the previous year, they said.