Oil crushing units start selling to foreign buyers via forward contracts

The oil crushing units have started selling to foreign buyers via forward contracts, for delivery after December in anticipation of a further fall in oil meal prices. They expect a sharp jump in seed availability following the kharif crop harvest in the United States and other major producing regions. This is a positive indication for oil meal exporters. Through this, crushing units would be able to compensate part of their loss from edible oil sales. As per  Solvent Extractors' Association (SEA) of India the average price of soybean meal was down 20% to $569 a tonne in September from $710 a tonne in May. Oil meal export fell 43% to 0.95 million tonnes (mt) in April-September, compared to 1.66 mt last year. The prime reason was a fall in export of soybean meal, by 87% to 111,027 tonnes as against 873,481 tonnes in the same period last year. The increase would be almost entirely on account of soybean. With a current forecast of 311 mt, global production would exceed the previous season's result by 10%. Preliminary forecasts for 2014-15 suggest a further improvement in the global supply and demand balance. For meals-cakes, a sizable surplus in supplies could push global inventories to historical highs. This, along with likely improvements in stock-to-use ratios, suggests considerable scope for international meal prices to soften further. In addition, further downward pressure could arise from abundant global supplies of feed grain.