Commodity News

Indian Soybean Supply Estimated Higher; Prices May go below 3500 by November/ December

Abhijeet Banerjee
Abhijeet Banerjee
soyabeans

Global supply of soybean is estimated to be higher versus previous year. The USDA has reported rise in world soybean production and end stock forecast in its latest Demand-Supply report. Even India is expected to see better harvest versus previous year. Government of India sowing reports had already indicated satisfactory planting progress till now. Department of Agriculture, USA reported on July 31st planting of soybean received a boost after the country experienced an early onset of the summer monsoon season in June. Rainfall in July slowed yet weather conditions remain favorable for rainfall to revive and support planting activity. USDA believes that the final data on Indian soybean area may expand to 11.7 million hectares, once farmers finish planting the last of those areas this month. Assuming normal yields, soybean crop is estimated at of 10.75 million tons, up 250,000 tons from last month’s estimate of the USDA. India’s soybean production during 2019-2020 marketing year stood near 9-9.3 million tonnes.  

Pace of planting is seen at satisfactory levels till now. India’s Agriculture Ministry reported on August 14th that Indian growers have covered nearly 187.14 lakh ha area coverage under oilseeds as compared to 163.57 lakh ha during the corresponding period of previous year.  The GOI sowing progress report conveyed rise in Area (versus last year) from the States of Andhra Pradesh (3.51 lakh ha), Gujarat (6.92 lakh ha), Madhya Pradesh (4.62 lakh ha), Maharashtra (3.53 lakh ha), Karnataka (2.49 lakh ha), Rajasthan (1.85 lakh ha), Tamil Nadu (0.81 lakh ha), Uttar Pradesh (0.13 lakh ha), Chhattisgarh (0.10 lakh ha), Uttarakhand (0.05 lakh ha), Punjab (0.03 lakh ha), Haryana (0.03 lakh ha), Odisha (0.01 lakh ha) and West Bengal (0.01 lakh ha). Similarly drop in year on year area is being reported from the States of Telangana (0.21 lakh ha), Bihar (0.09 lakh ha), Assam (0.04 lakh ha) and J&K (0.01 lakh ha). On the whole nearly 23.56 lakh ha more area has been covered under oilseed crops versus compared to last year. Soybean area cropped has increased to 118.99 Lakh hectares in 2020-2021 FY as against 111.46 Lakh hectares in 2019-2020 corresponding period. Therefore till date, there has been an increase in sowing area of soybean by 6.8% approximately.  

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Due to pre sowing harvest activity is expected to arrive in mandis by second week of October roughly. This would imply that after October month, new season arrivals will be at peak under this situation. As of now there is no problem with the sowing progress as well as the probable yields. At the same time, poultry business remains miserable. This explains upside price movement getting restricted since past months, despite Edible oil/Mustard markets registering decent gains this year. Although festive season may see moderate gains from current offers in next 2 months, most traders and industry persons expect wholesale rates to go below 3500 by November/Mid-December, considering upward revision in the Year-on-Year supply estimates and a dismal poultry business scenario.  

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