iGrain India - Soybean prices continue to soften due to slow pace of government procurement
Price Trends and Market Activity: Soybean prices have continued to soften, mainly due to the slow pace of government procurement despite the approval of 33.61 lakh tonnes for purchase from key producing states like Madhya Pradesh, Maharashtra, Rajasthan, and others. By 12 December, only 4.15 lakh tonnes had been procured at the minimum support price (MSP), which is leading to market instability and price declines.
Imports Impact: The Indian soybean market is seeing a significant influx of imported soybean oil, which is further pressuring domestic prices. Over 4 lakh tonnes of soybean oil were imported in November, contributing to the weakening demand for locally produced soy oil. A reduction in global soybean oil prices has encouraged Indian refiners to boost imports, affecting the sale of domestic soy oil.
Plant Delivery Price: Soybean prices at the plant delivery level have decreased by ₹50 to ₹100 per quintal across major producing states during the week. The price now ranges between ₹4200 to ₹4300 per quintal, notably lower than the MSP of ₹4892 per quintal. This price gap highlights the difficulties farmers face in securing fair compensation for their produce.
Soy Oil Prices: The prices of refined soy oil have also been impacted by the softening of soybean prices. During the week, prices of refined soy oil declined by ₹25 to ₹40 per 10 kg in various markets. Specific declines were recorded in Kota (₹45), Kandla (₹25), and Haldia (₹40), although Mumbai saw an improvement of ₹30, bringing the price to ₹1280 per 10 kg.
Arrival and Supply Dynamics: The national arrival of soybeans was 6 lakh bags (approx. 1.5 lakh quintals) on 6 December, but this dropped to 3.5 lakh bags by 12 December due to weak market prices and a slow procurement pace. The subdued demand for soymeal in both domestic and export markets also contributed to softening prices, leaving farmers with limited options for selling their crops at favorable prices.
Outlook: The government needs to accelerate the procurement process to support prices and alleviate the challenges faced by farmers. With slow purchases and weak demand, both soybean and soy oil markets remain under pressure. Further government intervention may be needed to stabilize prices and support domestic agriculture.