India’s Soybean Price Outlook for November 2021

Price trend analysis: 

Soybean has fallen by nearly 50 percent since August 2021, as spot farmers and stockists offloaded their stocks in heavy quantities against record high prices. The price control measures such as allowing soymeal imports, and applying stock limits in oilseeds also contributed to the fall.

A three time reduction in import duty of edible oils has also pressured the markets lately. 

As the arrival pressure is increasing gradually, buyers prefer regular discounts, anticipating the urgency of sellers to liquidate the stocks against adequate supply availability. This factor is adding to the negative tone amongst market participants regarding pricing of the oilseed. Between February 2021 and August 2021, there has been a massive price escalation in soybean (which is processed to produce soymeal) because of acute shortage of soybean in the supply line. 

The price rise was considered to be unsustainable by the industry and it was adversely affecting the small poultry farmers in context to weakening demand and high risk. Most farmers were not placing new chicks in the farms. Therefore the decision by the government to allow imports to curb the sharp appreciation in soymeal as well as soybean prices and save the livestock farmers was appropriate. The shortage in domestic feed availability has contributed to surging soymeal prices, eventually damaging the livestock, poultry and aquaculture industries since higher feed prices resulted in squeezing of the production margins.

Indian buyers had started negotiating for importing soybean meal after the notification, from neighboring countries like Bangladesh, Vietnam, and also for transshipments from the United States and other distant origins.

November outlook: 

Heavy rainfall in MP and Maharashtra during the latter part of September and early part of October has increased the possibility of crop damage, especially in the areas of delayed planting. Therefore as long as there is uncertainty regarding the production outlook, prices may not fall drastically. Arrivals are expected to intensify in coming weeks which is another limiting factor for the upward trend.

Nevertheless, current offers are turning cheaper and festive season demand continues, therefore the big farmers will not be willing to sell at current levels. At the same time, the tendency amongst stockists to procure cheaper soybean may improve. Edible oils are mostly trading with a firm tone these days. From a short term perspective, say for next few weeks prices will face difficulty in experiencing any sharp rise in prices.

However the downward side may be restricted till 4800-4900. In all we expect soybean prices to remain between 4800-5600 in the month of November.