Weak Early-Season Indian Soybean Meal Exports Contribute to Tight Global Markets

Though global soybean meal prices are down from last year, they remain higher than expected given the improved soybean supply situation. Reduced exports from key countries have constricted global soybean meal supplies and supported prices. Although Argentina's situation has a major impact, others such as India are also contributing to tight markets.

India's soybean meal exports are off to a slow start with November shipments estimated at only 165,000 tons. While this is nearly a three-fold increase over October, it is merely one-quarter the volume typically shipped in November.

The reasons for the sluggish exports are complex. Earlier in the year, Indian prices were well above competitors, leading to lower exports. However, recent price declines have brought Indian quotes much closer to other exporters, particularly the United States where sales have been strong. This suggests that India's lagging exports may also be a function of limited availability, caused by growing domestic demand and modest crush. Reduced crush is likely a result of slower sales from producers, in response to lower prices and late harvest, as well as weaker processing margins, caused by growing vegetable oil imports.

OVERVIEW

Global soybean production is higher on larger crops in Canada, Paraguay, and Ukraine. Soybean trade is raised as increased exports from the United States and others more than offset lower Argentine and Brazilian shipments. The U.S. season-average farm price is unchanged for soybeans, but raised for soymeal.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in November averaged $433 per ton, up $17 from last month. As of the week ending November 27, the 2014/15 U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 25.0 million tons compared to 24.0 million a year ago. Total commitments to the world are 39.7 million tons, compared to 37.6 million for the same period last year.

2014/15 TRADE OUTLOOK

  • United States soybean exports are up 1.1 million tons to 47.9 million on strong sales.
  • Argentina soybean exports are cut 200,000 tons to 8.0 million on lower producer sales.
  • Brazil soybean exports are down 700,000 tons to 46.0 million on increased competition from the United States.
  • Canada soybean exports are raised 100,000 tons to 3.7 million in response to larger supplies.
  • China
  • o Fish meal imports are lowered 300,000 tons to 900,000 in response to limited supplies.
  • o Rapeseed imports increased 250,000 tons to 3.8 million on growing demand for crush.
  • EU
  • o Palm oil imports are raised 550,000 tons to 6.9 million in line with the previous year's level.
  • o Rapeseed exports are raised 100,000 tons to 600,000 on higher exportable supplies and strong sales to the Middle East.
  • India
  • o Palm oil imports are up 150,000 tons to 8.9 million on growing total oil consumption and more competitive pricing.
  • o Soybean meal exports are down 100,000 tons to 2.9 million, reflecting reduced earlyseason shipments.
  • o Rapeseed oil imports are up 100,000 tons to 150,000 on expanding demand.
  • Indonesia palm oil exports are up 300,000 tons to 22.3 million as the elimination of the export duty spurs additional demand.
  • Paraguay soybean exports are raised 200,000 tons to 4.5 million on larger exportable supplies.
  • Peru fish meal exports are down 300,000 tons to 850,000 on reduced catch.
  • Turkey rapeseed imports are boosted 100,000 tons to 300,000 tons on a growing preference for the oilseed.
  • Ukraine soybean exports are raised 200,000 tons to 1.9 million on larger supplies