Soya: Government procurement continues

03-Jan-2025 10:38 AM

Soya: Government procurement continues
As of January 1, 2025, the government has purchased 8.12 lakh tons of soybeans. The purchase in Karnataka and Madhya Pradesh ended on January 1. In Karnataka, 15,906 tons were purchased against a target of 1.1 lakh tons, and in Madhya Pradesh, 3.8 lakh tons were purchased against a target of 13.68 lakh tons. Purchases will continue in Maharashtra (until January 12, 2025), Telangana (until January 7, 2025), Rajasthan (until January 15, 2025), and Gujarat (until February 9, 2025).
In Maharashtra, 2.62 lakh tons of soybeans have been purchased against a target of 14.13 lakh tons. In most states, the purchases have either ended or are in the final stages. Reports from I Grains India suggest that the total purchases could reach 8 lakh tons, and prices in the markets are currently below MSP.
To support farmers, import duties have been increased. The large imports of edible oils in recent months have also raised market prices. The demand for soy oil plants is weak, and many plants are on the verge of closure due to the imports of various edible oils.
The use of DDGS (Dried Distillers Grains with Solubles) has increased due to the rise in ethanol production from corn, making it a cheaper feed. This has led to a situation where DDGS is replacing soybean meal and mustard cake as animal feed. The reduction in demand from domestic oil mills has also impacted soybean crushing.
DDGS has become a challenge for oil mills, which are now facing difficulties in processing soybeans. Additionally, mustard prices are also below MSP, and mustard planting has decreased to the lowest levels in the last four years, nearing the end of sowing season.
The reduced sowing of both soybeans and mustard will impact the National Oil Mission. The government has sold large quantities of mustard in the market to increase availability, and soybeans will likely be sold in a similar manner, making price increases unlikely.
To support domestic oil mills, the government should increase the gap between refined and crude oil, allowing mills to import crude oil and refine it locally. However, there is little expectation for price relief in the near future. Following the increase in import duties, large quantities of refined oils are also being imported from Nepal and Bangladesh, which may pose a future risk to the industry. Given these conditions, it is not advisable to engage in speculative trading in edible oils and oilseeds.
The crushing of mustard, which was 1.3 million tons in March, has steadily decreased and fell to 600,000 tons in December.