Atul Mundhra & Associates, Indore1 PERSONA OF ‘CRUSHING S&D’ IN FEED INDUSTRY Presented by :...

Atul Mundhra & Associates, Indore 1

PERSONA OF ‘CRUSHING S&D’

IN FEED INDUSTRY

Presented by : Atul Mundhra & Associates, IndoreAGROFEEDS (93013 38000, 98260 38000)


INDIAN SOYMEAL• Soybean consists mostly of protein-rich meal;

about 85 percent of the world’s soybeans are processed, or crushed, annually into soybean meal and oil.

• Approximately 98 percent of the soybean meal that is crushed is further processed into animal feed with the balance used to make soy flour and proteins.

• Of the oil fraction, 95 percent is consumed as edible oil; the rest is used for industrial products such as fatty acids, soaps and bio-diesel.

• Indian Soymeal is 100 % non GMO product


INDIAN SOYMEAL

Cont.....

• It is accepted in more than 60 countries• Indian Soya industry produces approx 75

lac tons (LT) soyameal annually• Out of which exports account for 42 LT &

domestic consumption of 33 LT• Soymeal Ratio of domestic consumption

with respect to overall exports accounts for approx 78 % which retains a high impact over crushing statistics


ABOUT INDIAN SOY INDUSTRY

• India has been producing more than 11 million tons of soybean annually for last 2 years out of which around 10 million tons are crushed for meal & oil extractions

• India is 5th largest Soya producer of the world after US, Brazil, Argentina & China• India is also 4th largest exporter of Soymeal in the World after Argentina, Brazil & US • There are more than 100 Soya processors spread in MP, Maharashtra, Rajasthan,

CG, Gujrat, UP, AP, Karnataka & TN


ABOUT INDIAN SOY INDUSTRY

Cont......

• Top 5 Processors of country are crushing 42 % of total crop• Almost 98% crop is produced in six states of India i.e. MP, MH, Raj, CG, AP &

Karnataka• Indian poultry & compound feed industry spread across the country is

growing @ 10 % p.a. with consistent round the year demand• India is a second largest country of population having increasing edible oil

demand every year that means increased crush for oil will provide more soybean meal for feed.


S&D Follows


FACTORS AFFECTING SOYMEAL PRICES

• The crush margin & parities between meal, oil and seed• Weather at the time of Soya crop production at all

producing centers, domestic and international• Exchange rate (USD/INR)• Government policies such as Minimum Support Price

(MSP) fixed for the seed, import duty on oil & export incentives on meal and stock limits

• Price of the soybean against that of competitive crops used for Feed Industries, viz., Maize, Jowar, Bajra & other oil meals


FACTORS AFFECTING SOYMEAL PRICES

Cont…..

• Disease affecting poultry and cattle like bird flu • Demand of Soymeal from Foreign Countries and

Domestic Poultry & feed Industry • International soy price movement at CBOT, being the

major international reference market • Any other natural calamities beyond the control of

human being• Forecast of Soya production around the world through

USDA monthly Report• Shipping freight & logistic operations


FINDINGS OF S&D

• At present there is no mechanism for price discovery of meal in India other than export base transaction

• In off season, i.e. April to September when export demand remains less then 25% then industry has no organized base to discover true price

• In absence of price discovery mechanism, industry or users are required to refer nearby crushing S&D for further price movement

• In the event of disconnection of international price reference & geographical shortage of meal across India, one will be in need to refer monthly S&D to determine the steps ahead


FINDINGS OF S&D

Cont…..

• In a particular month if domestic demand remains more than 60 % of the total then price of the meal is driven through domestic feed market

• There has been general tendency of Feed industry to buy meal on short term basis & in that case if availability remains weak then industry goes to pay abnormal high price & abnormal logistic cost to secure meal

• 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 & discover the price respectively


CONCLUSION (How Important is Crushing S&D for Feed Industry)

• To change the buying pattern on deferred window mechanism (like export contracts)

• Should hedge the raw material (Meal) through physical forward contracts rather to opt secondary market (E-trade) as a tool because contract of secondary market settles at the price of Central region basis

• To refer nearby crushing S&D on regular basis to keep the price on track in view of unsystamtic geographical distribution of soymeal

• To avoid abnormal logistic cost one should keep track of nearest crushing capacities

• Tie-up with crushing plants is one of the solution for securing raw material because most of the Soybean stock remain with few crushing players & that wil shift the bargain power from feed industry to crushing industry even in export off


Thank You…

Presented on : 11th April 2013At : Khajuraho (Madhya Pradesh)

Atul Mundhra & Associates, Indore1 PERSONA OF ‘CRUSHING S&D’ IN FEED INDUSTRY Presented by :...

Documents

Transcript of Atul Mundhra & Associates, Indore1 PERSONA OF ‘CRUSHING S&D’ IN FEED INDUSTRY Presented by :...