usaid office of food for peace guatemala bellmon estimation

5.9.5. Recommendations
Prepared by Fintrac Inc.
The study team recommends bulk US soybean meal, with specifications as outlined below, for
monetization for FY12 for the following reasons:
There is a substantial commercial market for US soybean meal, with growing
commercial imports already sourced almost exclusively from the US.
Trade policies favor the import of US soybean meal, as there are no quotas or tariffs for
soybean meal from the US.
Monetization of a small volume of soybean meal would have no discernible impact on
normal trade relations between Guatemala and its usual trading partner in the soybean
meal market (the US), but would simply substitute for a very small volume of normal US
commercial sales in support of food security activities in Guatemala.
PVOs interested in monetizing soybean meal should pay special attention to the specifications
required by animal feed industry. Basic quality conditions include the percent protein, moisture,
fiber, and that the meal is free of toxins. Potential buyers are generally interested in the
following specifications: Soybean Meal 48 percent Protein or better (SBM) – minimum 48.0
percent protein, 1:1 discount from 48.0 percent to 47.50 percent; max. 12.5 percent moisture;
max. 3.5 percent fiber; 0.05-0.20pH urease activity; 75.0 percent-85.0 percent protein solubility;
minimum 0.5 percent fat; max. 6.0 percent ash; minimum 2.90 percent lysine (as is); max.
20PPB aflatoxin; max. 5PPB ochratoxin; max. 2PPM DON; max. 2PPM fumonisin; max. 50PPB
T-2; max. 125PPB zearalenone; max. 90F temperature.
Similar to the team's recommendations for yellow maize, the study team recommends the
following process for monetization of Title II soybean meal:
125
1. Discover prevailing market prices for US soybean meal on the CBOT. Note that
commercial importers face a CIF Puerto Quetzal price, which is composed of two items:
Future + Base = CIF Puerto Quetzal. The value of the "future" can be checked online via
CBOT. 125
It is important to define which month they would be delivering the product in
stock prices would have to define the futures price in the period. The "Base" consists of
a reward-punishment on the future value, the cost of freight and insurance. This value,
which includes freight and insurance, is not found on the Internet; instead, each supplier
manages their rates with the insurers and freight carriers the supplier hires.
A current reference price CIF Puerto Quetzal US soybean meal (48 percent protein) for
delivery in September 2011 is US$447 per MT. 126
2. Once a fixed minimum selling price based on a CIF price is obtained, determine whether
any potential buyers would require a discount for opening a letter of credit. If so, this
discount would be in the range of 1-2 percent of the contract.
3. These processes should be carried out at least three or four months before the date of
delivery as the large and medium companies that normally would be involved in their
inventory monetization typically cover three months in advance with their normal supply
chains. For the potential buyer to purchase a large amount of monetized goods, the
buyer has to have sufficient lead time in order to plan their inventory and storage.
Quotes are available via http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html
126
This is based on Future 364 / Short Ton Base 41.5 + / S = 405.50 Ton / Short Ton CIF Puerto Quetzal = 447 USD / MT.
BEST Analysis – Guatemala Chapter 5 – Monetized Food Aid 76