NEW DELHI: Farmers in Madhya Pradesh and Maharashtra might be celebrating the average price of soyabean touching 3,900/quintal, much higher than the government rate of 2,700, but the processing industry is in trouble.
Higher domestic prices, a loss of key markets, such as Iran and Vietnam, and a global bumper crop have impacted soyameal exports, which were down nearly 80 per cent in April compared with a year before, from 89,883 tonnes to 18,017 tonnes.
“The price increase has happened due to speculators holding stock. They obviously want prices to remain high, that’s why a bull run has been triggered. Unless there’s a price correction soon, since the commodity is overvalued, I don’t see things improving on the export front,” said Davish Jain, Chairman, Soybean Processors Association of India (SOPA).
Indian meal has been rendered far more expensive currently at a freight-on-board (FOB) price of $590/tonne than the produce from competing nations such as Argentina and Brazil, said experts.
“On the Rotterdam market, soyameal from Argentina is selling at $396/tonne while Brazilian exporters are selling at $385. This completely outprices Indian meal,” said BV Mehta, Executive Director, Solvent Extractors’ Association of India (SEAI). “Even with a price correction, this kind of disparity might not be mitigated,” said Jain.
Mehta said the ‘overpriced’ crop was hurting the industry domestically with processing becoming unviable at almost 1,000/tonne and said the Centre needed to raise import duty on crude edible oil to 25 per cent from the present 7.5 per cent to give local units a chance.
Better returns, compared with cotton, may prompt farmers to plant more soyabean this kharif season, said Jain, mainly due to the crop needing less water – between 18 and 22 inches being sufficient – with a deficient monsoon possibly in the offing.
“There could be a marginal 1 or 2 per cent rise in acreage, I don’t see a huge jump, but there could be better yields this season. This could add pressure to prices since there is already a surplus stock of 40.89 lakh tonnes,” he said.
The carryover norm is usually not more than 20 lakh tonnes. Short duration varieties such as JS 9560, used extensively across MP’s Malwa region last year, could become more widespread to counteract a weak monsoon.
A bad monsoon may lead to further hoarding and a continuation of the trend against market fundamentals, warned Mehta. “There’s surplus stock and no exports. Why should prices rise this much if it’s not due to hoarding,” he questioned.
The crop was grown across an estimated 108 lakh hectares in 2014-15 with 104 lakh tonnes produced, some of it destroyed due to inclement weather. Soyabean is generally rain-fed and is sowed between mid-June and early-July.
