India’s Soymeal export market share likely to remain subdued in 2016

India is unlikely to regain export market share in the coming year as per the latest report from the US Department of Agriculture. The country has been a significant regional exporter of soybean meal once, but now the domestic use of soybean products has been expanding year after year. As per the latest data shown by USDA, there is a 40% drop in our oil-meal exports, for the April to October period, over last year during the same period.
As per data released by the Solvent Extractors’ Association of India (SEA), oil-meal exports during the period fell to 763,113 tonnes from 1.26 million tonnes for the corresponding period last year. Oilmeal exports dropped to 13,716 tonnes, in the month of October 2015 alone, down by 94 per cent from 238,703 tonnes for the same month last year.
Poor soybean yields in India prompted the USDA to lower its 2015/16 crop forecast by 1.5 million tons this month to 9.5 million. Since production of a record 2012/13 harvest at 12.2 million tons, Indian soybean crops have been beset by a succession of unfavorable growing conditions like top productions regions received lesser monsoon rains in August.
September month was mostly dry while hot temperatures stressed soybeans during pod filling. Another subpar harvest this year will constrain Indian soybean crushing and the domestic production of soybean meal and soybean oil. Also, rapid growth in domestic consumption of soybean meal might result in Indian exports in 2015/16 dropping to a 28-year low of 700,000 tons (estimation by USDA).
India has been consuming soybean oil and exporting the excess meal historically. Growth in domestic poultry and egg production has increased demand for protein meal. But rising demand for soybean meal has unfortunately coincided with a lesser soybean production, tightening supplies and pushing local prices significantly above world levels. This situation badly impacted Indian soybean meal exports, particularly to distant markets. Nearly 50% of India’s soymeal exports went by surface trade to neighboring markets, primarily to Bangladesh and Pakistan. Yet these rapidly-growing markets are seeking alternative suppliers, purchasing not only more affordable soybean meal but also soybeans. India’s strong domestic use and declining export prospects appear likely to continue into the future, potentially ending its status as a net exporter. These circumstances may provide opportunities for the United States and South America to expand shipments to Asia. Even China processors are also exporting more soybean meal to Asian countries which were traditionally served by Indian suppliers.
Monsoon uncertainty will always persist in a given year, and not much effort has been taken to boost up production of soybean crop. Different factors contributing to hurdles for decreasing export market share of Indian origin soymeal, is becoming a concern for country’s economy. The threat of India moving out of exporters’ category will enhance further, in case adequate measures are not taken up by the Government.
Meanwhile with respect to the global price outlook, higher availability of soybean and strong global crush shall offset global meal demand quite comfortably. Hence soymeal prices in India and world markets might prefer moving in sideways trend in 2016.