Asian Meal Scenario

1
Asian Meal Scenario

• Davish Jain,
• President, The Central Organization for Oil
  Industry Trade
• Managing Director, Prestige Group of Industries,
  Indore

2
OVERVIEW

• The basic framework for my presentation on Asian
  meal scenario will be as under
• 1. The meals would mean soybean and rapeseed meal
  and also groundnut meal to some extent, since
  these represent major share of entire meal
  basket. However, the emphasis would be on soybean
  meal which has the major share.

3

• 2.   The importance and share of Asian meal
  markets in terms of import and export in the
  world meal scenario.
• 3.   What fundamental changes have taken place in
  Asian as well as worldwide meal market during
  last one year? What is in store for current year?
• 4.  Price forecast for 2009-2010 with special
  emphasis on the next 3 crucial months.

4
WORLD OILSEED PRODUCTION

• IN RESPECT OF 10 MAJOR OILSEEDS, WORLD PRODUCTION
  HAS STEADILY INCREASED FROM AROUND 261.36 MILLION
  TONNES IN 1996-97 TO AN ESTIMATED 423 MILLION
  TONNES IN 2009-10.
• SOYBEAN PRODUCTION WHICH IS ESTIMATED TO BE 244
  MILLION TONNES, ACCOUNTS FOR MORE THAN HALF OR
  58 OF THE PROJECTED GLOBAL OILSEEDS PRODUCTION
  IN 2009-10.

5

• World major oilseeds production in the last five
  years

Source USDA
Copra, Cottonseed, Palm Kernel, Groundnut,
Rapeseed, Soybean and Sunflower
6
Production of major and minor oilseeds in India
Source Ministry of Agriculture, Govt. of India
Lakh Bales of 170 kgs. Each
Lakh Bales of 180 kgs. Each
7
Production of major and minor oilseeds in India
Source Ministry of Agriculture, Govt. of India
8
World Soybean Production
Source USDA
9

• THE PHENOMENAL GROWTH IN PRODUCTION OF SOYBEAN
  HAS NOT BEEN CONFINED TO USA, BRAZIL AND
  ARGENTINA ONLY AND INDIA HAS ALSO WITNESSED THE
  SAME TREND OF HIGH GROWTH BOTH IN AREA AND
  PRODUCTION.

10
Source SOPA
11
INDIA AND THE WORLD

• India is still a pigmy as far as soybeans are
  concerned, with less than 5 share of total world
  production.
• However, in the area of soybean meal exports to
  Asian countries, India has substantial presence,
  as can be seen from the next few slides.

12
India in World Soymeal Industry
Source USDA

• India is one of the major exporters of soy meal
  to the Asian countries
• South Korea, Thailand, Philippines, Japan are
  some of the major importers of soy meal from the
  country
• Soy meal accounted for 84 of the total oil meal
  exports from the country

13
Indias Soy meal Exports Year wise
Source SOPA
Note Figures for the year 2004-2005 onwards do
not include Export to Nepal, Pakistan
Bangladesh by Rail/Road and figures for 2009-2010
are only for October, 2008 to August, 2009
14
Indian Soy meal Export to Asian
Countries(October08 to August09)
Source SOPA
Note Figures does not include Export to Nepal,
Pakistan Bangladesh by Rail/Road.
15
EXPORT OF OTHER OIL MEALS TO ASIAN COUNTRIES FROM
INDIA(October08 to August09)
Source SEA
16
DOMESTIC OILMEAL USAGE

• Unfortunately, authentic data on domestic use of
  various oilmeals in not available and the
  information is sketchy. Given in the next slide
  is the estimates domestic use of various
  oilmeals.
• One clear trend is that domestic use of soybean
  meal has been increasing over the years and this
  trend is likely to continue.

17
Domestic Consumption of Oilmeals in India
Source USDA
18
Price Movement Soybean meal
Source Chicago Board of Trade
19
OPPORTUNITIES FOR INDIA

• India has emerged as a major source of oilmeal
  exports to Asia in the recent years. As most of
  the exports are of soybean meal, I will confine
  myself to exports of SBM only. Given in the next
  table are figures of total exports of soybean
  meal in 2007-08 to major Asian countries by the
  four major suppliers namely, USA, Brazil,
  Argentina and India.

20
SHARE OF MAJOR SOYBEAN MEAL EXPORTERS 2007-08
21
SOYBEAN MEAL IMPORT SHARE OF MAJOR ASIAN
COUNTRIES 2007-08
CHINA (PRC)
0.18
VIETNAM
14
INDONESIA
18
JAPAN
9
THAILAND
17
MALAYSIA/
SINGAPORE
6
TAIWAN
(ROC)
SOUTH
2
SRI LANKA
PAKISTAN/
KOREA
PHILIPPINES
1
BANGLADESH
14
13
3
22
Indias Total Soy meal Export Country Wise
MALAYSIA/SINGAPORE
23
Major exporters of soybean meal to Asia
24
Major exporters of soybean meal to Asia
SOUTH KOREA
India, 540, 27
Brazil, 870, 44
USA, 55, 3
26
Argentina, 510,
25
FACTORS TO CONSIDER

• The factors which will determine the course of
  prices of soya meal in the next 6 months are
• 1.     The frost factor for US crop which is in
  final stages of growth.
• 2.     The crude oil price behaviour and
  mandatory blending announcements by various
  countries for bio diesel usage.

26

• 3. Likely restrictions limiting the participants
  in futures markets of energy/commodities.
• 4.     The ocean freight market.
• 5.     The pace of recovery of world economy
  along with the impact of revival packages
  announced by various developed countries.
• 6.     The progress of soya cultivation in South
  America, especially in Argentina which has
  witnessed a steep fall in soya production last
  year, but with much better projections for this
  year.
• 7.     Chinas import pattern for soybeans.

27

• During this period, India will continue to play a
  dominant role for meeting soya meal demand of
  major consuming centres. However the growth in
  domestic demand of soya meal in India has to be
  watched very carefully as there is no authentic
  data available/compiled for this sector. During
  2008-2009, despite a good soya crop, the soya
  meal export numbers were much lower than normal,
  and this is a pointer to the trade/industry to
  probe and assess Indian domestic demand more
  accurately.

28

• India as of now has already an order book for
  soya meal export to the tune of around 0.6
  million tonnes for November and December
  shipments. Currently monthly peak crush
  achievable by Indian crushers is around 1.3
  million tonnes, and considering 2.5 months crush
  during Oct - Dec quarter at this rate, the total
  meal availability will be 2.6 million tonnes. The
  net surplus meal for 4th quarter export is 1.2
  million tonnes, after deducting domestic demand
  of 0.6 million tonnes.

29

• The current order book is at much higher rates
  than prevailing ones and this is likely to keep
  cash soya seed prices supported at least during
  initial period of crop arrival. Immediately
  thereafter the farmer selling is likely to
  subside as the farmers expectations of higher
  rates rise by that time and he is reluctant to
  part with his stocks.
• The destination consumers expectation of further
  steep fall in Indian soya meal prices, as the
  reports have been filtering out from these
  markets, may not turn out to be true as the
  downside seems to be less than upside.

30

• PRICE OUTLOOK
• My estimates of price forecast are given below-