Soybean rates spike in Madhya Pradesh, Maharashtra

The sharp rise comes weeks after MP's price deficit scheme closed in December

Soybean rates in Madhya Pradesh and Maharashtra have risen sharply since January 1 over rumours of output being lower than expected. This could affect a big section of farmers because 70-80 per cent of the crop has already been sold, sources said.

The price spike comes weeks after the sale window of the Madhya Pradesh government’s much-published Bhavaantar Bhugtan Yojana closed in December. This has sparked speculation that traders who used the scheme to their benefit are now pushing up prices to clear inventories. 

Data sourced from various agencies show that soybean rates in mandis in Madhya Pradesh have risen by 14-25 per cent since January 1 and in mandis in Maharashtra by 30-35 per cent. Soybean rates in Madhya Pradesh and Maharashtra had barely moved during the same period last year. (see chart)

soybean chart

Mandi arrivals have dropped since January 1, but the fall has not been acute enough for such a sharp rise in prices.

Sources said the market was agog with rumours that government might lower its crop estimate significantly. “Stockists who have brought soybean from unregistered farmers during the Bhavaantar Bhugtan Yojana are contributing to this price speculation,” a source said.

“Soybean is now selling at Rs 3,800-4,400 per quintal in most places in Madhya Pradesh, but there is no international development to trigger such a sharp rise in prices,” said Kedar Sirohi, founder member of the Aam Kisan Union, a non-political farmer organisation based in Harda, Madhya Pradesh.

Initial data showed that soybean had been sown in 5 million hectares in Madhya Pradesh in the 2017-18 kharif season, 400,000 hectares less than last year. Production is estimated at 6.9 million tonnes, implying productivity of 1,385 kg a hectare, a jump of almost 6 per cent from last year. 

Arrivals during October-December, the three months when the price deficit financing scheme was on, rose to 2.16 million tonnes, 43 per cent more than the same period a year ago.

The marketable surplus of soybean in Madhya Pradesh has risen to 31.1 per cent between October and December from 21.4 per cent during the same period last year.

Soybean production estimates do not appear realistic. Output could be around 5.3 million tonnes against the anticipated 6.9 million tonnes.

Industry sources said 7.5 million tonnes of soybean were needed to produce 6 million tonnes of soymeal   – India’s estimated export in the 2017-18 crop year. The actual crop size is around 10.4 million tonnes. 

The Soybean Processors Association of India has estimated soybean production in country in 2017-18 at 9.1 million tonnes, which is also more than the requirement.

SOYBEAN CHART 2

“There is no shortage of soybean and in the current demand and supply scenario there is a surplus. So how come prices are rising so sharply suddenly?” wondered DN Pathak, executive director of the Soybean Processors Association of India.