Global as well Indian markets had faced a severe downward trend till March 2020, and before the rally started this year, the commodity had suffered from significant fall in demand, caused by the coronavirus and swine fever in China, forecasts of global oversupply, and a stronger U.S. dollar.
Soybean resumed the upward journey after the March low of 3200-3250 and has appreciated by more than 1200 points since then. The poultry industry was reviving in a slower pace during the second quarter which restricted the upward trend between April and June. But as the unlocking activity started and rumors regards infection risk due to poultry product consumption faded, demand the poultry products began improving July-August onwards. Because of increasing consumer confidence regarding poultry consumption, people slowly started dining out in greater numbers in those areas, where hotels and restaurants began functioning.
Market in recent months was supported from reductions in domestic crop production estimates, increase in demand outlook and downward revisions in the carry forward estimates versus earlier projections. Strong upside rallies in edible oils had also favored the upward price action. Soybean meal export demand has been moderate till now but market participants are now expecting overseas purchase queries to emerge now since the Indian soymeal export offers are competitive versus its competitors.
Further Price Appreciation On Cards - Consumption of poultry products had reached 57 percent to 60 percent of the pre-COVID time till September, and market talks as well as industry reports suggest that there is higher possibility of consumption to reach over 70 percent in forthcoming quarter. Ex-Farm prices of Eggs have increased in last few months, and clearly reflected in price levels, which are higher than June end levels presently. The World supply demand factors continue indicating increasing price outlook because of lower than earlier estimates of production and end stocks, in addition to stable domestic demand. Bullish USDA reports since last couple of months will be an additional positive price driver in the longer run. Besides, cues from global edible oil markets still appear positive for next few months.
The USDA has reduced India’s crop estimate to 90 Lakh tonnes versus earlier estimates of 114 Lakh tonnes. Lowering of India’s Soybean production estimate by nearly 20% had added fuel to the bullish sentiments from a broader perspective. Persistent unfavorable weather in Brazil and Argentina during the growth stage of soybean can result in lower yields - if this is true then it will be another key positive trigger for soybean markets in the longer run. All in all, a bullish year for soybean is expected during greater part of 2021. Soybean market ends the year on the highest level (around Rs.4600/qtl for the NCDEX quality grades), since beginning of 2020, and further price appreciation is likely in forthcoming months.
