Soybean contracts hit lower circuit on record output estimate

All futures contracts of soybean hit the lower circuit on the National Commodity & Derivatives Exchanges (NCDEX) on Wednesday due to bumper crop estimates during the current kharif harvesting season.

Soybean contract for delivery in October declined by 3.9% to Rs 2,954 a quintal. The far months contracts including November, December and February plunged by 3.8%, 3.6% and 4% to settle at Rs 2,958 a quintal, Rs 2,990 a quintal and Rs 3,088.5 a quintal respectively.

Rajesh Agarwal, spokesperson of Indore – based the Soybean Processors’ Association (SOPA), said, “The new season crop has started hitting the market. Since, the crop is estimated to set the new high record this season, prices are falling.”

Despite delayed sowing, the estimated increase in yield is expected to increase overall soybean output by 8% this year. Total soybean production to achieve all time high record this season to a record 12.68 million tonnes this kharif harvesting season as compared to 11.65 million tonnes in the previous year.

SOPA estimates average yield to increase to 1185 kgs a hectare (ha) for the season 2012 as compared to 1127 kgs a ha in the previous year. Overall sowing area is also estimated to increase from 103.34 lakh ha in the previous year to 106.95 lakh ha this year.

“India is heading for a record soybean crop this season despite delay in planting in the beginning of the sowing season. Scattered rainfalls and adequate recovery later in the season helped farmers recovered the early loss in acreage,” Agarwal added.

Since, the seasonal rainfalls were revived after two months in the first week of August, the sowing was delayed proportionately. Scattered rainfalls in the beginning, however, benefitted the crop's germination. Soybean is India’s largest oilseed crop sown with the onset of monsoon rainfalls in June for harvesting in October.

Barring smaller states in terms of soybean production including Rajasthan and Karnataka, the output in all producing states are set to increase on improved climate favouring higher productivity.

While Madhya Pradesh continues to remain on the top with an estimated production of 6.2 million tonnes of output, Maharashtra followed suit with 4.0 million tonnes of expected output. Total production in these two states remained at 6.2 million tonnes and 3.6 million tonnes respectively.