Atul Mundhra & Associates, Indore1 PERSONA OF ‘CRUSHING S&D’ IN FEED INDUSTRY Presented by : Atul Mundhra & Associates, Indore A GRO F EEDS ( , )

Atul Mundhra & Associates, Indore2 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

Atul Mundhra & Associates, Indore3 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

Atul Mundhra & Associates, Indore4 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 5 th largest Soya producer of the world after US, Brazil, Argentina & China India is also 4 th 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

Atul Mundhra & Associates, Indore5 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 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.

Atul Mundhra & Associates, Indore6 S&D Follows

Atul Mundhra & Associates, Indore7 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

Atul Mundhra & Associates, Indore8 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

Atul Mundhra & Associates, Indore9 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

Atul Mundhra & Associates, Indore10 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

Atul Mundhra & Associates, Indore11 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

Atul Mundhra & Associates, Indore12 Thank You … Presented on : 11 th April 2013 At : Khajuraho (Madhya Pradesh)