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.
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.
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.
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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