Soybean short term price outlook not positive – Advise for Farmers

Prices of soybean are moving in narrow range in the country at present, and the farmers as well as stockists are releasing their produce at every rise these days. Daily arrivals in the country are not so big, while retail end demand seems moderate. The poultry demand is not supporting the price rise of soybean at present, due to the COVID outbreak situation. This pandemic has dampened prospects – but mostly for the short term. There were optimistic views that as the economies slowly open up and rumors regarding spread of corona through poultry product consumption gets curbed demand for poultry products and eventually poultry feed ingredients are most likely to improve again. This implies that export prospects of soy meal are expected to recover by next quarter roughly. As such, fresh purchases are seen amongst stockists whenever wholesale rates in mandis are falling below Rs3750/qtl.  

It is mainly the lowering arrivals, better price outlook for next year’s first quarter and strong fundamentals for the domestic edible oil market like soya oil that prevents any noticeable drop in prices.  Demand in poultry product is showing improvement slowly and one has to observe to whether demand for poultry products is able to favor wholesale prices to sustain above Rs.4000/qtl in longer run. The egg market is stabilizing slowly and as per market views it will take few more months for situation to improve for the poultry product business. 

Expectations of normal rainfall this monsoon season has raised industry estimate of soybean acreage under by 10% roughly for 2020-21 (Jul-Jun) Kharif season. Soybean is the largest grown Kharif oilseed, having more than 30% production share of the total oilseed basket of the country. With weather department forecasting satisfactory rainfall this season, there is better prospect for soybean planted area to increase in the major producing regions of India. There has been an increase in 10% of Kharif sowing area during the period 1.06.2020 to 16.07.2020. Oilseeds 154.95 lakh ha area against 110.09 lakh ha area last year i.e. area coverage increased by 40.75 %. Soybean planted area as per current data indicates a significant jump to 109 Lakh hectares versus 79 lakh hectares area covered previous year corresponding period.  

 As the previous season crop lies with most of the farmers, they are not in mood to sell much in physical markets since prices outlook for coming months are brighter versus current rates. However, for small farmers it is advisable that at every rise of Rs50-100/qtl from current levels, they should continue disposing their produce since prices are unlikely to increase much for

next few months. Uncertainty over poultry demand to stabilize and improving sowing prospects shall keep price outlook slightly negative for shorter run, say next 3-4 months at least. Due to early sowing this year, it is likely that new season arrivals start coming with good flow by latter half of October instead of mid-November. As such, thoughts of abundant supply availability October onwards shall restrict upward price movement, in addition to subdued demand from the poultry feed industry. Some spikes in wholesale prices can be expected during festive season – that will be an opportunity for farmers to sell their old season produce in mandis. New season supplies will be at peak November onwards and this will be ideal time for farmers to start stocking the new crop, since prices will be quite cheaper during this time.