Indian Oil Meal

Scenario

Davish Jain,
Managing Director, Prestige Group of Industries,
Indore
Chairman, The Central Organization for Oil Industry
& Trade
OVERVIEW OF HISTORICAL PERSPECTIVE

In the immediate aftermath of the first Green Revolution in

food grains, India’s Oilseeds sector has witnessed a steady
growth in the last 25 years.

Production of oilseeds has registered an increase from

18.44 MMT in 2000-01 to 27.7 MMT in 2005-06 averaging in
recent years at 25 MMT. Thanks to good monsoon this year a
record crop is expected bringing it in the range of 30 MMT.
Production of major and minor oilseeds and --- importance
of Soybean, Groundnut and Rapeseed playing a crucial
role. Indian Oilseeds Production
Quantity in Million

9
8
7
Tonnes

6
5
4
3
2
1
0
Groundnut

Rapeseed
& Mustard

Soybean
Sesamum

Linseed
Sunflower

Castor
Safflower

Niger
Oilseeds

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

 Growth in Area Under Soybean Cultivation & Production in India

16

14

12
7.150

Millions
6.127
10 6.932 6.122
5.900
5.347 5.400
8 5.050 5.010 4.300
4.476 4.028
6 3.900
3.360 3.236
2.549
4 7.672 7.716
6.354 5.645 5.812 6.002 5.675 6.456 7.208
4.817 5.004 5.599
2 3.868 4.365 4.025
3.217
0

2003-2004

2005-2006
1999-2000

2000-2001

2001-2002

2002-2003

2004-2005

2006-2007
1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99
Year

Area Under Soybean Cultivation (In Million Hectares) Production of Soybean (In Million Tons)

Thus, Soybean has played a predominant role. Soybean

output has more than doubled in the last 10 years and is
expected to reach a level of 8.6 million tons in 2007-08,
making available around 6.2 MMT of Soybean Meal with 4
MMT for exports. With current international prices as high as
US $300+ per MT, this year would well turn into a record year
of highest ever exports of Indian Soymeal earning close to
The graph below puts the Indian situation in global
perspective and shows that while we may be the fourth
largest exporter in the world, we need to increase our output
to be able to generate much higher volume of export.
Projected loss of 15 MMT this year means the world soybean
production will
World be closer
Soybean to 2005-06 level.
Production
Quantity in Million Tonnes

250

236.05

221.62
220.56
215.72

200
186.53

150

100

50

0
2003-2004

2004-2005

2005-2006

2006-2007

(Projection)
2007-2008
Years
 Import of Oilmeals by South East Asian
Countries
Quantity in '000 tonnes

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Meal, Rapeseed Meal, Soybean Other

Oil Meals

2003/04 2004/05 2005/06 2006/07 Projections 2007/08

Southeast Asia includes Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines,
Singapore, Thailand, and Vietnam. Import demand of Far East Asian countries like China, South
Korea, Japan & Taiwan, which are also regular importers of Oilmeals from India, is in addition.
 Export of Soybean Meal by Major
Producers (As per USDAprojections)

35,000

30,000

25,000

20,000

15,000

10,000
o
T
s
e
'0 Q
n
u
tiy
a

5,000

r
e
th
O
il
z
a
r
B

y
u
g
r
a
P
tia
n
e
g
r
A

ia
d
In
s
a
S
d
ite
n
U

Producers

2003/04 2004/05 2005/06 2006/07 Projections 2007/08

It is a coincidence that this year, soybean production in USA
and China will fall by about 20%.

Thus, on all counts – be it the output, the global price level and
the global competitive pressure -- for India, it is going to be an
excellent year full of promise and wholesome performance.

Out of the total Indian oil meals exports, Soybean meal exports
constitute almost 90%. Last year Soybean meal exports
contributed Rs. 4070 crores to the exchequer and this year it
will go up further. This is important since almost two-thirds of
India’s annual production of Soymeal is being exported. The
Soybean Industry also contributes another Rs. 3500 Crores by
way of import substitution of Edible oil to the domestic Edible
Oil pool.
 GLOBAL SOYMEAL TRADE
World Trade - 52.98 Million MT (Approx.)

India’s Share - 4.2 Million MT (Approx.)

i.e. 7.92%
Largest Asian Supplier of Soymeal catering to over one-third of total Asian
SBM imports
THE INDIAN INDUSTRY’S COMPETITIVE STRENGTHS

USP's of Indian Soybean Meal Are :

 Non-GMO Character with natural purity
 Small Sized Parcels ranging from a 20 ton container load
to 20,000 tonner ship
 Higher Protein content vis-a-vis U.S. & South
American Meal. Protein about 4% higher in case of normal
Meal which is a great nutritional advantage in feed
formulations
This year, we had highest ever export of Soybean Meal i.e. 4.196 Million
tons and much more potential and demand exists for Indian Soybean Meal
in the international market.

Annual demand for Soybean Meal in the international market is

approximately 52.98 Million tons.

Presently we are supplying only 4.196 Million tons out of the huge demand
of 52.98 million tons. A vast potential exists for further increase in Indian
Soybean Meal exports especially to Asian countries where India should be
the largest soymeal supplier in 2007-08.
 India - A key Supplier to Asian Countries

Our two neighboring SAARC countries - Pakistan & Bangladesh, both represent markets
with potential of exports of 0.5 Million tons per year.

In the recent years, the major markets for Indian Soyameal have been - Vietnam, China,
Indonesia, South Korea, Japan, Thailand and Philippines. This year provides an
opportunity to consolidate our hold, capitalizing on other favourable factors as well of
lower freight advantage and containerized cargo shipments of smaller consignments,
competitive price and vastly improved port and shipping facilities.
 Indian Soybean Meal Export to Asian Countries
(October-September)

VIETNAM

THAILAND
TAIWAN
Quantity in Metric Tonnes

SRI LANKA

SOUTH KOREA
SINGAPORE

SEYCHELLES
PHILIPPINES

PAKISTAN

MALAYSIA
KOREA

J APAN
INDONESIA

CHINA

BANGLADESH

Countries

2003-2004 2004-2005 2005-2006 2006-2007

Upto Aug'07

Export from India by surface (Rail/Road) to neighbouring countries are 300,000 to 5000,000 MT in
addition.
Statistics just shown illustrate clearly that it is vital to
sustain the strength in our traditional markets in East Asia
and monitor in particular changes going on in major
consuming countries like China and Vietnam: An alert eye on
continuing presence in Middle East and Africa is also
required. We also need to constantly review our globally
competitive position and the way in which we could capitalize
on the unique advantage of protein rich Indian Soymeal of
Non GMO variety. Non-GMO variety can emerge as a
reassuring factor whenever diseases such as bird flu in
poultry and blue ear in pigs crop up.

Assessment of India’s strengths and weakness, opportunities

and constraints has to be made on a continuous basis in the
light of evolving world situation.
Emerging Challenges and Opportunities : Domestic
Demand of Meal
Quantity in '000 tonnes Domestic Consumption of Oilmeals in India

3,500

3,000

2,500

2,000

1,500

1,000

500

0
Cottonseed

Peanut

Rapeseed

Soybean

Sunflowerseed

Other
Oil Meals

2003/04 2004/05 2005/06 2006/07 Projections 2007/08

The domestic demand for Soymeal is estimated to jump from 1.5 million MT
to over 2 MMT this year on account of increase in poultry activity in India,
especially broiler farming and the ongoing replacement of animal proteins by
soymeal.
Growth in consumption of soymeal particularly for feed uses has more than
doubled in the past five years. In fact feed use of domestic soybean meal is
now growing faster than the production of soybeans. Increasing domestic
demand can help in balancing hitherto exclusive dependence on export of
Soymeal, thereby providing much needed stability to soybean industry and
trade.
EXPANDING ACREAGE AND ENHANCING
PRODUCTIVITY

Cultivable area needs to be increased for oilseeds

The focus has come on tapping the tremendous scope for expanding
cultivation of soybean and other oilseeds and steady increase in output as
well as productivity. COOIT is playing a proactive catalytic role in regard to
increase in productivity per hectare which is very low compared to the global
average. This is a field in which coordinated push by industry, government
and research agencies is called for. Higher production and productivity would
enhance industry’s competitive strength. It has become imperative to
increase both production and productivity to take advantage on a
competitive basis of enormous global demand for Soymeal and other meals
as well as steadily increasing domestic demand.
MNC’S INTEREST IN INDIA
While the sickness syndrome may have dampened the spirits in
past years, the industry is now back on its growth track.

In this context, the increased interest of large MNCs in investing

and doing business with India and from India to East Asia becomes
significant. If this trend builds up, it would be interesting and
useful to watch its impact on the Indian industry’s future in the
global setting as well as in the domestic market growth. Domestic
industry needs to be alert and take timely measures to enhance its
competitive edge. COOIT as the apex organization, has to play a
leading role in influencing Government policies in the right
direction.
POTENTIAL TO INCREASE CROP PRODUCTIVITY
While for soybeans, ground-nut and rapeseed, increasing trend in the output
needs to be maintained and tempo built up for enhancing productivity to
come at par with growing market opportunities both in the field of meal as
well as refined oil. But in this field, it should be clear that future gains in
soybean production should be increasingly in improvements in the yield per
hectare, which is still way below the world average and weaken us in the
highly competitive global market.
 PRICE OUTLOOK FOR THE NEW CROP YEAR
2007-08:
Annual Average Domestic & Export Price of Various Oil meals in India
Indian Oilmeals 2006 2005 2004 2003 2002 2001 2000
(a)  Local Ex-Mill (Rs./Tonne)

1.Groundnut Meal (Saur) 45/2/5 7166 7059 8364 8286 7326 7119 7612

2.Groundnut Meal (Saur.)(Non-guarantee) --- --- NQ --- 6972 6645 7284

3.Rice Bran Ext.(Mumbai)16/5/8 4633 3723 3092 3745 3657 3032 3409
4.Kardi Meal (Mah) 20/2.5 3387 3085 3111 3592 3357 3344 3833
5.Soya Meal (Indore) 48/2.5 8446 8807 12126 10019 8959 8118 7915
6.Rapeseed Meal(Gujarat)38/2.5 4289 4339 4415 4431 4333 4971 5096
7.Sunflowerseed Meal(Mah/Karn)30/2.5 4797 3645 3788 4728 4176 5117 5337
B) Export (FAS) (US$/Tonne)  

1.Soyabean Meal(Bulk)Yellow(Ex-Kandla) 48/2.5 204 216 256 197 192 187 190
2.Rapeseed Meal (Bulk) 38/2.5 112 112 110 107 96 110 112

3.Groundnut Meal (Bulk) (Ex-Bedi) 45/2.5 157 145 190 110 131 119 NQ
4.Castor Meal(Bulk)(Ex-Kandla) 55 67 NQ 30 NQ NQ NQ
(C) Export (FOB) (Rs./Tonne)  
1.Soyabean Meal(Bulk)Yellow(Ex-Kandla) 48/2.5 9105 9462 12202 10386 NQ NQ NQ

2.Rapeseed Meal (Bulk) 38/2.5 4910 4826 4860 4926 NQ NQ NQ

3.Groundnut Meal(Bulk)(Ex-Bedi) 45/2.5 6889 6573 8632 7269 NQ NQ NQ
The statistics just shown need to be kept in view since India
is currently selling new crop Soymeal at 40% more prices, due
to enormous competitive advantage in freight rates and
proximity to Asian markets in contrast to distant north and
South American origins.

The current demand is also brisk from all major importers in

Asia. This is expected to continue till March, 2008 and could
possibly stretch even further.

Major Asian countries like China, Japan and others in East

Asia, who, despite having large crushing facilities, may find
importing ready soybean meal and oil a more economical
option in view of ocean freight differential of approx. US$ 50
to 60 per MT.
PERIOD WISE PRICE OUTLOOK

1st Stage : Sep. – Oct., 2007

Over half a million tonne Indian Soymeal has already been contracted till mid
September 2007. Most of the trade has taken place on the basis of premium
over December CBOT Soymeal quotes ranging from US$ 10 to US$ 22 per
short tonne. On this basis, the average price realization so far is estimated at
US$ 300 per metric tonne FOB Indian Port, which is almost 40% higher
compared to the previous two years.

2nd Stage: Nov. – Dec., 2007

It is expected that the premium may further rise in case the ocean freight
rates from South America and North America to Asian destinations do not
soften. In such an event, the supplies from these origins would mostly be
destined upto European continent especially for soymeal.
3rd Stage: Jan., 2008 onwards

Soybean sowing and crop development in South America would be the key
and ocean freight rates to Asia would impact the Soymeal prices. If there is
no increase in production prospects and ocean freight rates hover around the
same high level, then there would be a high draw down on the Indian stocks
due to continued buying expected from Asian countries for Indian Soybean
Meal. China could be a star buyer taking away a major chunk of Indian
Soymeal exports. Hence we can be assured of a bright and buoyant
marketing scenario for Indian Soybean meal, and can clock a billion US dollar
of export earning much earlier than we could have normally anticipated. This
could well turn out to be a really solid booster dose.
STRATEGY FOR THE FUTURE:

To sum up, the oil meal scenario has both challenges as well as
opportunities in equal measure. We need to concentrate our
attention especially on the following:

 Need for closely coordinated approach to the domestic and the

export markets in view of steadily expanding domestic demand
and simultaneous need to keep a firm foot-hold in export markets
taking full advantage of currently favourable scenario.

 Explore fully emergent potential of exporting to neighboring

destinations (SAARC, South East Asia & Far East) & getting a firm
hold there.

 Take advantage of after-effects of bird flu and blue ear menace to

build export of Non–GMO Indian varieties, both to nearer Asian as
well as distant European markets.
 Concentrate on improving consistency, physical appearance &
prospects of the Indian meal in regard to its texture, colour,
particle size & free flow of meal; homogeneity and quality have to
be the two buzz words to fetch the right value avoiding undue
discounting.

 Enhance output of soybeans and other oilseeds with much more

emphasis on increasing productivity

 Keep a very close tab on price movements and changing global

trends.