Indian feed suppliers hope to settle Vietnam trade row

 India's corn and soymeal exporters are hoping that a trade row with Vietnam over quality issues will be resolved soon because alternative supplies are driving up Vietnamese prices, traders said on Friday.

Authorities in Vietnam, a leading buyer of Indian corn and soymeal, had rejected 50,000 tonnes of the grain and feed after finding insects in cargoes. Corn prices in Vietnam have now surged 11 percent, with meal rates likely to go up as well.

An industry official said Vietnam buys around 20 percent of its total corn and soymeal import needs from India. The Southeast Asian country is beginning to meet the gap in Indian supplies with costlier imports from faraway Argentina.

"For Vietnam, India is the most competitive source for corn and meal. Vietnam can ill-afford to keep India out," said Atul Chaturvedi, chief executive for farm business at Adani Enterprises, India's biggest exporter of farm goods.

B.V. Mehta, executive director of the Solvent Extractors' Association of India said cargoes from Brazil or Argentina may take 45 days to reach Vietnam against the 8-10 days that Indian supplies take to reach.

"India has a distinct advantage in terms of logistics. I am not surprised by the price rise there. Vietnam will have to sort this out sooner than later," Mehta said.

Traders say it is convenient for Vietnam to buy corn and soymeal from India as the latter typically supplies in small lots, unlike Brazil and Argentina that export in large panamax vessels.

Feed millers from Vietnam were in talks this week to buy some 60,000 tonnes of corn from Argentina but the deal could not be concluded as buyers cited higher prices, regional traders said.

Mehta said Indian suppliers had been forced to pay "very high" demurrage costs for their vessels stranded at Vietnamese ports.

It's been more than a month since Vietnam rejected Indian cargoes totalling 50,000 tonnes, with demurrage costs estimated at $450,000.

"With very high demurrage costs, no Indian trader is willing to export to Vietnam. One must realise that no other importer, including China, Japan and Korea has complained about the quality," Mehta said.

March 6^th, 2011

Source: Reuters India