1. Commodity News

Launch of Soymeal Futures at NCDEX – A value addition to Soy complex basket

Abhijeet Banerjee
Abhijeet Banerjee
Soyabean
Soymeal

Soymeal trading at NCDEX has commenced from February 17. Total volume on the first trading session was recorded at Rs.281 Lakhs in value terms while total lots traded were 660 MT and Net Open Interest stood at 180 MT. 

NCDEX has launched futures trading in animal feed ‘Hi-pro soybean meal’. (Or, High Protein Soymeal). Revival of Indian origin soymeal in the quality-sensitive Asian and European soybean meal markets is reflected in the recent jump in exports. As such, the need for domestic producers and exporters to have a proper risk management tool in local currency has increased of late. Launch of soymeal is seen as a rational decision in serving the purpose across the soybean value chain.  

The Soybean meal price becomes a complete reference for the entire Soy complex since crushing of soybean crushing yields about 80% Soybean meal. Therefore, launch of soymeal trading at NCDEX will be seen as a significant value addition for the soy complex basket. India is amongst the top 5 leading Soybean producer and exporter of Soymeal, the availability of a national price benchmark will help the entire Soy value chain from farmers, traders to millers, exporters, and the entire feed industry which is the biggest demand driver for Soybean meal. 

Declining Soymeal exports and erratic soybean production in recent years have resulted in considerable pressure on the oil milling industry; hence they are prone to the price risks. With launch of Soybean meal trading contract, scope for the value chain participants in finding a complete hedging solution has increased now. This will be advantageous for the feed industry as well. This implies that in coming years, the poultry, livestock and dairy sectors shall be able to handle their price risk and optimize their balance sheets.      

The basis center and additional delivery center for the contract would be Indore and Latur, respectively. The futures contracts, expiring between March and September 2021 will be available for trading presently.  The futures contract of soymeal will be helpful in serving the soybean processing industry as the most cost-effective tool to manage price risks in local currency at this juncture, when there is extreme price volatility in domestic as well as international markets.  

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