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News 278 views last update:6 Aug 2012

Expensive soybeans slow down TVO profits

The rising costs of imported soybeans have slowed profit margins for Thai Vegetable Oil, Thailand's largest soybean feed producer. TVO said it expected 2007 profits to increase by only 6%-7%.

Executive vice president Sethasan Sethakarun told Reuters a fall in global supply would continue at least into the third quarter, putting a cap on the company's profit for the year.

Higher soybean prices
With 90% of its beans imported, the average import price had been in the range of US$330-360 per tonne so far this year, up from $270-$280 per tonne in 2006, Sethasan said. Overhaul of US farm policy had resulted in fewer soybean acres, pushing up global soybean prices, although new supply from Argentina and Brazil late this year should help, he said.

30% market share
TVO, which has a daily soybean crushing capacity of 4,000 tonnes, supplies the domestic feedmill industry and counts Charoen Pokphand Foods, the country's largest chicken exporter, among its major clients. It is the largest domestic firm, with 30% market share, and competes with imported soy meal mainly from Brazil, Argentina and India.

Trade deal
A pending free trade agreement with the United States would eliminate Thai import duties on soy meal, now at 4%, adding to pressure on domestic producers. However, the trade deal has been delayed due to Thailand's prolonged domestic political crisis and may not come into effect until after a general election scheduled for late 2007, Sethasan said.

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