High output to keep soybean prices under check
A good monsoon has increased chances of higher production this year
Higher production will continue to keep soybean prices under check in the 2016-17 crop year in both domestic and international markets. Due to slow arrivals caused by demonetisation, prices are moving in a range. Further weakness in prices is expected once the new crop comes to the market.
Soybean prices were largely sluggish in 2016 as they fell around 18.3 per cent from Rs 3,700 per quintal in January to Rs 3,029 per quintal by the end of the year. In between, by
April prices had moved up to a yearly high of Rs 4,290 per quintal due to lower production in 2015-16, higher import cost of edible oil and
lower than expected rabi oilseed production. From those levels, soybean lost almost 30 per cent by the end
of the year. After April, prices started declining along with predictions of better monsoon, dip in global oil prices, higher imports and low demand for soy meal in the export markets, said Ritesh Kumar Sahu, research analyst (agri commodities), Angel Commodities.
A good monsoon has increased chances of soybean production in 2016-17. According to the soybean processors association of India (Sopa), soybean production in the country is expected to touch 11.49 million tonnes in 2016-17 against 7 million tonnes in the previous year.
Well distributed monsoon rains and good weather conditions were reported across top soybean producing states of Madhya Pradesh, Maharashtra and Gujarat. The agriculture ministry has pegged India’s soybean output in 2016-17 at 14.2 million tonnes. Though the area under soybean cultivation is 1.4 per cent lower than last year, the yield has almost doubled due to favourable weather conditions.

Higher production will see soy oil imports coming down, while soy meal exports going up. Soy oil imports have been revised down to 3.8 million tonnes from 4.24 million tonnes last year. The 2016-17 imports will thus be lower by 12.8 per cent. In 2015-16, the import of oil had risen to 4.24 million tonnes from 2.99 million tonnes in the previous year.
Soy meal production is expected to rise to 6.8 million tonnes against 4.5 million tonnes last year. As a result, the export of soy meal too is forecasted to more than double to 180,000 tonnes against last year’s 70,000 tonnes. The soy meal exports have been declining since 2013-14 due to higher prices of domestic soy meal compared with those in South American countries. In 2013-14, exports stood at 3.44 million tonnes.
Production is expected to be higher this year in other soybean producing countries like the US, Brazil and China as well. Global soybean production is predicted to touch 338 million tonnes, up 7.9 per cent compared with 313 million tonnes last year.
The comfortable supply situation will be putting pressure on prices this year. “Soybean prices have touched their low this season on forecast of record production, record soy oil import and poor export demand for the domestic soy meal. But prices may remain within a range in the first half of the year, as the new season arrivals have not yet peaked due to demonetisation. Farmers are not bringing their produce amid lack of buyers in the market. The bulk buyers or oil mills are not willing to procure soybean at higher prices,” said Sahu.
Till the new crop continues to arrive in the market during the next 3-4 months, prices may remain range bound. Soybean prices may take support at Rs 2,800 and Rs 2,500. Resistance could be witnessed at Rs 3,400, he added.
sangeethag@mydigitalfc.com
Columnist: 
Sangeetha G.