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Soybean Oil

Soybean Oil

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Published by: sumitsinnarkar on Dec 01, 2010
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11/08/2012

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SOYBEAN OIL«

Introduction 
Soybeans on crushing and solvent extraction yield soyoil at 18% recovery and soymeal. About 85% is crushed worldwide. Soybean and soyoil production of 170-185 and 25-31 million tons account for 55-58% and 25-30% of global oilseed and oil production respectively. US, Brazil, Argentina, China, and India are the major producers in order of production. In US, India, China crop starts arriving from Aug-Sept, while it starts from Jan-Feb in S. America. In the world 55-60, 8-10 and 42-45 million tons of beans, oil and meal are traded annually. 

USA (20-30 million tons), Brazil (12-18 million tons), Argentina (5-10 million tons) are the exporters of beans, while China (18-20 million tons) and EU (15-18 million tons) are the major importers. Argentina (3-5 million tons) and Brazil (2-3 million tons) are the major exporters of oil. China (1.5-2.5 million tons) and India (1-2 million tons) are the major importers of oil. Crushers, refined oil manufacturers, animal feed manufacturers and farmers are the major stakeholders in the soy value chain worldwide. 

Soya bean oil is the second leading vegetable oil traded in the international markets after palm. Palm and Soya bean oils together constitute around 68% global edible oil trade volume, & Soya bean oil alone constitutes of 22.85% of the whole. China imports all its soybean oil almost from Argentina and Brazil. India imports soya oil from Argentina, Brazil and US. India imported 192649 tons of Crude Soya oil during June 2010. According to USDA, the country is estimated to import 1.19 million tones of soy oil for 2010-11, while China is estimated to import 2.15 million tones during the same period.

Major Soybean Producing Countries

Seasonality
USA January February March April May June July August September October November December Harvesting Harvesting Sowing Sowing Sowing Sowing Sowing Harvesting Harvesting Harvesting Harvesting Harvesting Harvesting Sowing Sowing Harvesting Harvesting Harvesting Harvesting Harvesting Sowing Sowing Sowing Sowing Sowing Sowing Brazil Argentina China India

India in World Soy Industry
Soybean Annual Data (Rounded figs.) Annual Seed Production Annual Oil Production Annual Oil Imports Annual Oil Consumption Annual Meal Production Annual Meal Exports Annual Meal Consumption India

(In Million Tones) World India¶s Share (In %) 3.5 3.2 16 7.5 3.4 6.3 1.2

7.9 1.2 1.6 2.8 5.4 3.5 1.9

225.3 37.5 10 37.5 160.3 56 159.2

Indian Scenario
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India produces 7-9 million tons of beans, 1.2 million ton of oil and 4-6 million tons of soymeal in a normal year. With imports, the total oil availability in the country is around 2.5 million tons. Madhya Pradesh (3.5-4.5 million tons), Maharashtra, Rajasthan are the major producers of soybean in India. The production is highly dependent on the monsoon and fluctuates between years. Soy is a Kharif crop, sown in June-July and harvested by SeptemberOctober. Peak arrivals are from October-November. The prices follow the international sentiments and display very high volatility.

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Major Trading Centers in India
Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Nagpur in Maharashtra, Kota in Rajasthan are major trading centers. Spot markets of Indore and Mumbai serve as the µreference¶ market for Soya oil prices. The prices in Indore reflects the domestically crushed soybean oil (refined and solvent extracted) while Mumbai price indicates the imported soy oil price. CBOT is the biggest exchange for soybean oil. In India, NCDEX and NBOT are the major exchanges for these commodities. Current scenario: Refined soyaoil futures is trading up with August and September contracts moving up by 0.45% and 0.54% respectively. August soyoil futures traded at `484.70 while September futures were at `487.50 per 10kg. Crude Soya oil import price is US$ 880 per ton at Mumbai port whereas Crude Palm oil import price is US$ 805 which indicates the difference of less than 10 percent between the two.

Taxation
H.S.Code Crude Soya Oil Refined Soya oil 15 07 1000 15 07 9010 

There is zero import duty on crude soybean oil in India while it is 7.5% for refined oil. Excise Duty on Refined Soya Oil is 4% plus 3% Ed.Cess on it. CST is 2% on Refined Soyaoil.  M VAT 5% on all edible oil from 1st May 2010. (In any form refined or unrefined)

Soybean oil price chart ($/mt)

Years

Market Influencing Factors
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Weather at all the producing centers, domestic and international. The pod bearing period, being the most crucial. The area planted, determined by the price of soybean against that of competitive crops, viz., maize, jowar, bajra. International price movement, the futures market at CBOT being the major international reference market. Pests and diseases. The supply-demand and price scenario of competitive oils, viz., palm oil. Demand for soymeal from the feed sector and the entire fundamentals of this sector. The crush margin between meal, oil and seed

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Soybean Imports
As a matter of policy India government has been averse to make soybean imports viable and hence India has never imported soybeans. Soybean import was discouraged and oil import was resorted to only to meet the shortfalls. From time to time there were attempts by trade and industry to seek concessional terms for import, so that the domestic crushing capacity could be utilized, but these efforts have not yielded much««

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