Bird’s Eye View of Indian Soybean Market - Downside Remains Capped

Soybean markets were seen moving in a confined range during the week ended recently. Daily arrivals were limited and retail demand was moderate. Edible oil market was firm during greater part of the week and kept buying interest quite stable in wholesale markets. As the previous season crop lies with most of the farmers, they are not in mood to sell much in physical markets since prices outlook for coming months are brighter versus current rates.

The poultry demand is not supporting the price rise of soybean at present, due to the COVID outbreak situation. This pandemic has dampened prospects – but mostly for the short term. There were optimistic views that as the economies slowly open up and rumors regarding spread of corona through poultry product consumption gets curbed demand for poultry products and eventually poultry feed ingredients are most likely to improve again. This implies that export prospects of soy meal are expected to recover by next quarter roughly. As such most farmers and traders/stockists are holding most of their stocks in anticipation of getting better rates in near future.

Average Mandi Prices of Superior grades in Indore

Expectations of normal rainfall this monsoon season has raised industry estimate of soybean acreage under by 10% roughly, to nearly 12.4 ha approximately for 2020-21 (Jul-Jun) kharif season. Soybean is the largest grown Kharif oilseed, having more than 30% production share of the total oilseed basket of the country. According to farm ministry data, soybean was sown across 11.3 mln ha in 2019-20. With weather department forecasting satisfactory rainfall this season, there is better prospect for soybean planted area to increase in the major producing regions of India. However farmers of Maharashtra are facing problem of early germination failure at present. Due to poor/ inferior seed quality, the farmers are in a dilemma, regarding fate of the crop grown in their fields. Soybean is a major Kharif crop of the Country. Maharashtra leads the production and there are reports of area covered between 40 to 42 lakh hectares. Soybean is the second-largest crop in the state after cotton and gives good returns to the farmers almost every year. The crop had given decent returns in the previous season as well.

Timely onset of the monsoons was encouraging for the farmers go for early sowing, especially in Marathwada and Vidarbha. The oilseed is sown in June and harvested October with the oil marketing year lasting till next September. Seed manufacturers cite lockdown, as one of the main cause as it adversely impacted the process of certifying seeds. Therefore most seeds were sold under the satisfactory quality labels. Most farmers are now demanding government interventions now, so as to get the matter resolved. Sources say that primary estimations reveal nearly 50 per cent of area planted under soybean in Parbhani and Hingoli could be affected from the inferior quality seeds.

Dadasaheb Bhuse, Maharathra’s Agriculture Minister has made an important appeal to the farmers not to rush for early sowing, unless rainfall is full-fledged in the state. This is because any hasty decision for sowing can bear serious affect over crop yields. Often there is delay in next phase of rainfall after the first spell of rain showers.

The monsoons after covering Maharashtra, typically reach Madhya Pradesh by mid June and it covers the entire country by second week of July. MP is the largest producer of Soybean followed by Maharashtra and Rajasthan. Madhya Pradesh, Maharashtra and Rajasthan are the largest soybean growing states, and account for around 80% of total oilseed production in the country. Madhya Pradesh alone accounts for more than 50% of India’s soybean.

For the coming week, there is least possibility of any significant fall in prices since wholesale demand remains stable, selling intentions amongst stockists and farmers are less while edible oils specially palm oil and soya oil are inclined in upward track mostly. It is mainly the poultry demand which is subdued enough to check the price rise these days.