Soybean Prices Decline Due to Abundant Supply and Weak Demand
09-Nov-2024 06:00 PM
Soybean Prices Decline Due to Abundant Supply and Weak Demand
Soybean prices have dropped across various states due to a combination of factors: an abundant supply driven by a good production season, slow government procurement, and sluggish demand from millers.
Price Drop by Region:
Madhya Pradesh: Rs 100-150 per quintal decrease
Maharashtra: Rs 175 per quintal decrease
Rajasthan: Rs 125-150 per quintal decrease
Despite the government's increase in the Minimum Support Price (MSP) for soybeans by Rs 272 (or 6.34%) from Rs 4600 per quintal for the 2023-24 season to Rs 4892 per quintal for the 2024-25 season, market prices remain well below the MSP.
Market Supply: On average, between 6.50 to 7.50 lakh bags of soybeans are arriving in the wholesale markets daily, putting further downward pressure on prices. This influx of soybeans combined with low miller demand has weakened the price outlook.
Government Policy Impact: Despite the government’s attempt to boost soybean prices through a 20% increase in import duties on edible oils, the intended effect on soybean prices has not materialized. The soybean price remains low due to weak domestic procurement and insufficient demand.
Soy Oil
The price of soybean oil has also softened, dropping by Rs 30 per 10 kg, with most plants reducing prices by Rs 10-20. Specific price drops include:
Kota and Kandla: Rs 15 decrease
Haldia: Similar reductions in price.
The post-festival season slowdown in demand, coupled with ongoing imports of soybean oil, has resulted in a lackluster market response. Despite this, the Union Agriculture Ministry has projected an increase in domestic soybean production to 133 lakh tonnes from 130 lakh tonnes in the previous season.
Soymeal
The price of soymeal has also weakened, making it more attractive to industries like animal feed and poultry feed. This price reduction could spur greater demand in these sectors, as well as potentially improve soymeal exports. The weakening prices are expected to have a positive impact on export demand, but the government should consider increased intervention in purchasing soybeans to stabilize the market.
Key Takeaways:
Soybean prices have decreased due to an abundant supply and sluggish miller demand.
The increase in MSP has not been effective in raising market prices, which remain below the MSP.
Soybean oil and soymeal have seen price declines, with soymeal demand expected to rise in animal feed sectors and exports.
The government’s policy changes, including the higher import duty on edible oils, have not yet yielded the desired impact on prices.
Given the current trends, government intervention in increasing the purchase of soybeans at the support price could help stabilize the market and support farmer incomes.