Global downturn on soybean trade, exports surge in India due to good crop prospects

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New Delhi, Sep 7: Favourable weather conditions and an increase in acreage in India, continue to increase soybean exports, while at the global level, soy futures continue to see a downturn amid an absence of fresh supportive news.

According to a statement from the ministry of agriculture in New Delhi on Friday, the area under cultivation for soybean crop increased from 8.7 million hectare last year to 9.5 million hectare this year.

The country is poised for a record export of more than 5.5 million tonne of soymeal in the current crop year (November 2007 - October 2008), higher than a previous forecast, and may sell the same quantity in 2008-09 due to strong demand and a good harvest.

The high yield in India is due to higher crop coverage reported by Madhya Pradesh, Maharashtra and Karnataka, coupled with favourable weather conditions prevailing for the crop. However, the current crop coverage is also higher by 31.51% in comparison to the normal crop area.

Analysts say that the demand for protein-rich feed-stocks like soymeal has been rising rapidly due to greater global consumption of poultry products.

"A jump in freight costs and a farm strike over high soy export taxes in Argentina, the world's top exporter, helped India sell more in South Korea, Japan, Thailand and Taiwan," Rajesh Agrawal, Indore-based Soybean Processors' Association of India (SOPA) said.

According to Debjyoti Chatterjee of Mape Admisi Commodity Research, the weakness in crude futures coupled with a stronger dollar, continue to attract speculative selling in the absence of fresh market moving features. In the US, soybean sales are estimated at 2 lakh to 5.5 lakh tone. Soymeal sales have ben projected in the range of 15,000 to 1.25 lakh metric tonne, with soyoil sales expected in a 0 to 15,000 tonne range.

Worries over crop losses in the US delta from heavy rains associated with remnants of former hurricane Gustav and an already tight stock situation served as underpinning features, limiting losses as well.

Meanwhile, the government extended the futures trading ban on soybean oil by another three months despite rising prices.

The government had imposed a ban on futures trading on four key commodities - potato, refined soyoil, chana (chickpea) and rubber in the commodity exchanges in May in order to control rising prices.