Transcript Document

Approach Soy S&D Differently
Presented by :
Atul Mundhra & Associates, Indore
AGROFEEDS
(93013 38000, 98260 38000)
Soy in India – a Brief
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India produces various oil-seeds & soy is prominent of them
It is a kharif production in India
Monsoon is a major factor for this crop
India has been producing soy since last 5 decades
Now it reached at the level of more than 10 Million Tons for last 5
years
That’s why; India is 5th Largest producer of soy in the world
Almost 90 % crop of India is produced in three states
Central India is the leading hub of Soy Industry having a bench
mark of price
MSP of the Soybean for the year 2012-13 is 2240 per quintal
Soy Distribution in India
All figures are in Lac of Metric Tones
PARTICULARS
MP
MH
RAJ
CG
SOUTH
OTHERS
TOTAL
CROP SIZE
(2012-13)
59.00
37.00
10.50
1.60
4.00
1.30
113.40
CROP SIZE
(2011-12)
55.00
35.00
10.00
1.50
4.00
1.00
106.50
(Source : COOIT)
Indian Soymeal – a Brief
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Indian Soymeal is 100 % non GMO product
It is well accepted in more than 60 Countries
India produces approx 75 lac tons (LT) Soymeal annually
Out of which export remains around 42 LT including 10 LT
export to neighbor countries & domestic use at 33 LT
approximately
Ratio of domestic use to overseas exports remain 1:1
98 % of the Soymeal is used into animal feed, poultry industry
& aquaculture
India is 4th largest exporter of Soymeal in the world
CBOT is the major international reference market , however
India does have its separate S&D for price discovery
‘S’ - Supply Status
• There are more than 90 Soy processors across three states
however only 20 % plants run through-out the year
• Top 3 processors of country crushes 40 % of the total
crushing
Prevailing Pattern
• Now-a-days Indian soy industry is running at the same model
of brazil soy industry wherein six months supply is oriented
to export & another six month to cater domestic demand
• Sellers remain reluctant in supplying small cargo to small
buyers
• Lack of attention towards Quality check measures
• Usually offer a selected range of products
• No standard mechanism for grievance redressal - for both
Seller & Buyer
• No system of Buyer’s feed-back about quality & supply
performance
• Production of steady cargo instead to the requirement as per
Buyer
Supply Revolution
Blueprint
• Seller can fix an eligible credit supply risk for small & regular
buyers
• Sellers should ensure a thorough quality check on regular
basis
• There should always be a variety of product offerings like Hipro, Super Hi-pro etc.
• Seller should prefer to provide goods according to buyer’s
requirement rather than a steady cargo
• Sellers should be kind enough to redress the grievances of the
buyers
• Sellers should have a proper feed-back system to improve the
quality & performance
‘D’ - Demand Status
Prevailing Pattern
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Domestic buyers generally purchase Soymeal on regular & ready
basis without considering the forward position of availability
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Lack of tie-up with sellers for a constant supply through-out the year
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Prefer to buy from traders even on high credit appraisal due to
liquidity crunch
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Buyers reluctant to pay true value of ‘quality’
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Absence of independent quality assessment
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Refrain to refer Soy S&D on regular basis
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Absence of hedging mechanism
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Crop Nos. are always estimated & not authenticated unlike in US,
Argentina & Brazil there is an association for Crushing & Exports
Demand Revolution
Blueprint
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Should change the buying pattern on deferred window mechanism (As in
export)
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Ensure tie-up with sellers for a constant supply through-out the year to avoid
unpredictable abnormal shortage later
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Prefer to buy directly from crushers with eligible credit appraisal
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Refer Data of Soy Supply & Demand on regular basis due to fragmented
industry & unauthenticated data
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Should take a proper hedging of raw material (meal) through physical forward
contract instead of secondary market because E-contract settles on spot price
of central region basis
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A standard domestic Soymeal contract should be designed separately for local
buying & that too for different locations
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An Independent Arbitration body should be there & their arbitration should be
enforceable to both Seller & Buyer
This S&D has been prepared by us
1. There always remain variation between official estimates & trade estimates
2. Supply & Demand is made more out of educated guess in absence of systematic
mechanism to derive concrete quantity nos.
No platform to discuss crushing & feed demand S&D on regular basis
Intercessor – an eminent Link
• Intercessor plays an important role in supplying & procuring
Soymeal for the soy industry
• Soy industry is well organized but inland trade is mostly
unorganized
• Unfortunately, India does not have a direct mechanism for
automatic price discovery of domestic meal & in absence of that
Intercessor remains a good platform for finding correct price
discovery
• One may keep a direct track of Soy S&D on regular basis through
a Intercessor
• Intercessor also mitigate the risk of both the parties to trade
through his proper co-ordination, co-operation & knowledge
• Information related to soy industry is readily available to
mediator which can be helpful to buyer & seller as well
• Always stand as primary arbitrator in case of contract dispute
Thank you
Sincere acknowledgement to
our Research Team :
CA Naynesh Gandhi
Nikhil Parwal
Presented on : 4TH May 2013
At : Hotel Radisson, INDORE
Feel free to contact on
0731 – 406 2626 / 27, 2566 500
Email : [email protected]
Global Trade Point of Agri Commodities Since - 1982