Soybean price gloom for farmers to continue

Despite a marked fall in sowing in Madhya Pradesh due to the slump, there's a lot of carryover stock

Farmers in Madhya Pradesh (MP) have planted less of soybean due to falling return. The prices aren’t expected to show a big rise even in 2017-18, with strong carryover stock and weak global edible oil markets.

Sowing in MP, the country’s biggest producer, has fallen to 4.8 million hectares in 2017-18, from 5.3 million hectare (mn ha) in 2016-17. More farmers in the central parts — around Hoshangabad, Harda, Sehore, Nasurullaganj, etc — opted for pulses and other crops instead.

The Centre’s recent move to raise the import duty on crude edible oils to 15 per cent from 7.5 per cent, and on refined oils to 25 per cent from 15 per cent, will only have a temporary impact on prices, traders said. Carryover soybean stock from last year’s crop is estimated at two to three million tonnes.

The critical differentiator in this could be the weather over western MP and parts of Maharashtra over the next few weeks. If the dry spell continues, it might have an adverse impact on final output, pushing up prices.

However, weather department officials said the dry spell over parts of MP, Marathwada and Vidarbha, and parts of Chhattisgarh, could be broken in the next few days. A cyclonic circulation over the Bay of Bengal will help in reviving the monsoon in these parts.

Falling soybean rates and diminishing returns from one of the main crops grown in the western parts of MP are being blamed for the widespread farmers’ agitation in the state that claimed six lives in police firing in June. The open market price in Indore and adjoining wholesale markets had dropped closer to its Minimum Support Price (MSP) of Rs 3,050 a quintal (qtl) and even lower in some places.  This Thursday, it was Rs 2,900-3,000 a qtl. Prices have remained around Rs 3,000 a qtl since 2015, a blow to the economy of Malwa-Nimar where this crop is majorly grown.

“I don’t anticipate any big change in soybean prices this season. Any possible shortfall in production could be compensated by good carryover stock but only if the weather does not turn adverse in the coming weeks,” says Rajesh Agarwal, a former chairman of the Indore-based Soybean Processors Association of India and an old industry hand. 

He said the processing industry was also not expected to benefit from the falling prices, as they have been functioning at less than 50 per cent capacity for several years. “Even if total availability of soybean falls by 10 per cent as compared to last year, there shouldn’t be any problem and prices might not rise by much,” another trader said. Global soy oil and palm oil prices have dropped sharply in recent months due to bumper palm production in Malaysia, which has also dragged down soy oil prices.

In such a scenario, unless the Indian bean crop suffers big damage, retail prices aren’t expected to see much change, once again making the crop non-remunerative for farmers in MP and Maharashtra – the two states which have seen the largest incidence of farmer agitation this year.