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Informist, Thursday, Jan. 30, 2025

 

By Anjali Lavania

 

MUMBAI – Government agencies like the National Agricultural Cooperative Marketing Federation of India and the National Co-operative Consumers' Federation of India Ltd. have purchased a record 1.63 million tonnes of soybeans from farmers across the country at a minimum support price of INR 4,982 per 100 kg. Market participants and experts believe that although the government has done this to support the currently falling prices of soybean in various mandis, it may not be very helpful in the long term as they do not see prices of the legume rising above INR 4,500 per 100 kg. 

 

"Soybean is only one or two times procured by NAFED, so it will be, of course, a record procurement," Rahul Chauhan, director of IGrain, said. 

 

Of the total quantity sanctioned for oilseed procurement, soybean has the largest share at 3.38 million tonnes, according to data by NAFED. The Centre has allowed six states--Karnataka, Telangana, Madhya Pradesh, Maharashtra, Rajasthan, and Gujarat--to procure soybean from farmers in 2024-25.

 

In Maharashtra, NAFED procured 780,000 tonnes till Jan. 24, according to agency data. Similarly, procurements in Madhya Pradesh, Rajasthan and Telangana were seen at 620,000 tonnes, 80,994 tonnes and 83,075 tonnes, respectively. Soybean procurement lasts for 90 days in each state.

 

"With procurement getting over in most states, farmers are unhappy as the prices are still below MSP. If this continues, most of them will shift to other crops next year," said Mahesh Sameriya, a trader from Rajasthan.

 

Factors like the presence of soymeal substitutes in markets, increased global supply, reduced international prices, and poor international and domestic demand for Indian soymeal are weighing on soybean prices. 

 

"Despite the record procurement of soybean by government agencies, prices are not expected to rise in markets due to the presence of dried distillers grains with solubles, or DDGS, which has already weakened the demand for soymeal," said Shailendra Soni, a trader from Madhya Pradesh.

 

Argentina has reduced its export duty from 33% to 26% on soybeans from Monday until the end of June. "This significant reduction is expected to have a profound impact on the global soybean market, potentially leading to increased supply and lower prices," Soni said. Argentina is one of the largest producers of soybeans.

 

"With the reduction in export tax, Argentina's production capacity could lead to an influx of soybeans into global markets. This could further strain the already-challenging situation for Indian soybean farmers, making it difficult for them to receive fair prices in their local markets, despite record procurement," Soni added.

 

The current falling price situation has left many farmers feeling uncertain about their financial stability even though record procurement is done by government agencies, said Narendra Porwal, another trader from Madhya Pradesh. 

 

Soybean production is estimated at 13.4 million tonnes, more than 13.1 million tonnes, according to the first advance estimate for 2024-25 (Jul-Jun) released by the government on Nov. 05. 

 

The demand for soymeal exports has weakened, resulting in reduced crushing activities. This decline is compounded by rising imports of soyoil, which have further diminished the profitability of local soybean crushing operations.

 

Crude soyoil imports during December increased to 420,651 tonnes from 152,650 tonnes a year ago. Crude soyoil imports during Nov-Dec rose to 828,299 tonnes from 302,544 tonnes a year ago, according to data from the Solvent Extractors' Association of India. 

 

"NAFED and NCCF have purchased 1.63 million tonnes at MSP. It may end up near 1.7 million tonnes. As soybean prices were trading below MSP levels this year, government agencies were able to procure at MSP to support the farmers," said Indrajit Paul, head of research at Agrocorp International. Despite such high procurement numbers, market prices are currently trading much lower than MSP around INR 4,200 to INR 4,250 per 100 kg, he said. 

 

"Despite a record procurement of nearly 1.7 million tonnes at MSP, soybean prices remain stubbornly below support levels, hovering around INR 4,200-INR 4,250 per 100 kg. With NAFED expected to offload stocks from Mar-Apr 2025, market dynamics could shift. However, the bigger pressure point is the feed industry's shift from soybean meal to dried distillers grains with solubles, or DDGS, with maize DDGS production projected to surge 81% on year. This demand rationing could keep soybean meal under pressure, capping any major price recovery," Paul said. 

 

The market expects that NAFED will sell soybean in the market from Mar-Apr onwards. Seasonally, the arrival of soybeans becomes slow in the market from March onwards. Hence, government agencies may liquidate their stocks in the market during these months.  End

 

Edited by Deepshikha Bhardwaj

 

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