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Informist, Thursday, May 8, 2025

 

By Anjali Lavania

 

MUMBAI – With China deciding to stop or reduce imports of soybean from the US, India's oilseed traders fear that the market, which is already reeling under rock bottom prices, may receive a further blow of increased supply. Last month, China effectively halted purchases of the US soybean as part of counter-retaliatory trade measures. This shift is expected to deepen the global oversupply, pushing Indian soybean prices further below the support levels.

 

Soybean prices in most of the domestic markets in India are currently hovering around INR 4,400–INR 4,450 per 100 kg, which is below the minimum support price of INR 4,892 per 100 kg. While state procurement agencies had stepped in to buy at the minimum support price, no major improvement in prices was witnessed. As of Apr. 20, the National Agricultural Cooperative Marketing Federation had procured 1.47 million tonnes of soybean, which is 43.6% of the sanctioned quantity of 3.38 million tonnes, according to data by the central procurement agency.

 

Factors like higher soyoil imports, sluggish soymeal exports, abundance of soybean stocks across the country along with availability of cheaper substitutes are weighing down the oilseed prices, said Shailendra Soni, a trader from Madhya Pradesh. NAFED is actively selling soybean, maintaining a steady supply in the market. "Ample supply and sluggish soymeal demand may limit the potential for significant gains in the short term. Soybean price movements will heavily rely on government sales now," he added.

 

Due to growing presence of cheaper alternatives such as distiller's dried grains with solubles as feed for livestock and poultry, and poor demand, soymeal prices are under pressure, said Narendra Porwal, another trader from Madhya Pradesh. Distiller's dried grains with solubles is a byproduct of the production of ethanol. Grains like corn, wheat, or rice are fermented and distilled to make alcohol. The leftover material, rich in protein, is dried and used as feed for livestock and poultry. With a sizable portion of soybean crop going to soymeal, the fall in the price of the latter cannot but reflect on the former.

 

Even though domestic soyoil prices are going down, imports have been rising. Crude soyoil imports during March increased to 355,358 tonnes from 218,604 tonnes a year ago, data released by the Solvent Extractors' Association of India showed. Crude soyoil imports during Nov-Mar rose to 1.91 million tonnes from 882,943 tonnes same period last year, according to the data.

 

In March, soymeal exports fell by 5% to 187,678 tonnes compared with 198,928 tonnes in the same month last year, data from SEA showed. The overall export of soymeal during 2024-25 (Apr-Mar) fell marginally to 2.12 million tonnes from 2.13 million tonnes in 2023-24. Germany and France are the major importers of non-genetically modified soymeal from India.

 

The Chinese move seems to have a potential to further bring down local prices of the oilseed.

 

"In early March, China imposed a 10% tariff on the US soybeans in response to a similar tariff imposed by the US on Chinese goods. Following further US tariffs, China retaliated with an additional 34% tariff on all US goods, bringing the total tariff on soybeans to 44%. This means that US soybeans now face a 44% tariff while entering China," said Rahul Chauhan, director of iGrain India. 

 

With the US soybeans sidelined, Chinese crushers have turned aggressively to Brazil and other South American countries. "Market participants estimate that China may import 80 million tonnes from Brazil this year, compared to just 21 million from the US," said Indrajit Paul, head of research at Agrocorp India. Higher US tariffs and strategic diversification have driven China to reroute its soybean demand toward Brazil, he said. 

 

According to experts, there are high chances that more US soybean will enter the global markets in near-to-medium term due to China's actions. "If the US exporters suddenly re-enter the market with high volumes, world soybean prices would almost certainly decline from current levels," said Paul.

 

For India, the impact of this evolving trade landscape is becoming increasingly relevant. "Indian traders, who are sensitive to international supply-demand shifts, may see downward pressure on prices in the near-term due to expanded availability of US soybeans in non-Chinese markets, alongside possible price competitiveness from Brazilian supplies," according to a research report by Kedia Advisory. 

 

"Harvesting in Argentina continues and Brazil has completed its harvest, leading to increased global soybean supply from South America which is resulting in softening of global soybean prices," said Soni.

 

With China buying less from the US, American soybeans are entering alternative markets, increasing global supply and putting downward pressure on prices. At the same time, cheaper Brazilian soybeans are also entering global markets, further crowding the markets. This will lead to further bearishness in the soybean prices on the Chicago Board of Trade, which have direct impact on Indian soybean prices, said a commodity analyst from a multinational food and agriculture company, who spoke on condition of anonymity.

 

This evolving trade map raises deeper questions about the future of US agricultural dominance and the long-term trajectory of China's economic alliances. But the effects are not just confined to the two superpowers. Markets like India are beginning to feel the strain and should be ready for unpredictable global trade environment, as per the report by Kedia Advisory

 

"Looking ahead, as China deepens its agricultural realignment with Brazil and signals willingness to disrupt multiple commodities, the global agricultural trade system is poised for a structural reshaping," according to a report by Kedia Advisory. "The Indian soybean market faces rising risks from intensified Brazilian competition, increased volatility linked to CBOT trends, and growing soyoil imports hurting domestic crushing. With farm-gate prices at risk of a 5–8?ll, India's soybean sector must brace for heightened global pressures ahead." End

 

Edited by Akul Nishant Akhoury

 

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