The surge in soybean rates in the domestic markets the past few weeks has given rise to allegations of speculators manipulating prices in the commodity markets. It has also rattled the poultry and livestock sector for whom soybean meal is a major constituent of cattle feed.
Though the price jump might be a positive signal for farmers just when they are sowing their crop, trade sources said the unprecedented rise in soybean rates in the domestic markets is not entirely driven by fundamentals and is also a handiwork of speculative activity in the commodity exchanges.
Sowing of soybean, which is one of the major kharif crops, has been lagging since middle of June due to patchy progress of southwest monsoon in major growing areas of Madhya Pradesh and Maharashtra.
Till July, the crop has been sown in around 10.25 million hectares of land which is 8.7 percent less than the same period last year.
The maximum drop of over one million hectares has been in Madhya Pradesh, which is the largest state growing soybean.
“Soybean sowing has been affected in Rajasthan and Madhya Pradesh due to late arrival of monsoon and erratic rains, resulting in lower sowing as compared to last year and diversion of area to other crops,” the Soybean Processors Association of India (SOPA) had said in its crop outlook report.
SOPA had forecast on July 16, that soybean area in Madhya Pradesh might go down by 10 per cent as compared to 2020, as farmers have switched to other crops such as black gram, maize and moong in Sehore, Vidisha, Harda, Hoshangabad, Sagar, Damoh, Guna and Ashok Nagar districts of Madhya Pradesh, mostly due to higher price of seed and non-availability of good quality certified seed.
“Although the supply-demand for oil year 2020-21 is slightly tight, it does not support the kind of price rise seen in the last few months. There is no physical stock in NCDEX warehouses which is further fueling the speculation,” SOPA Chairman Davish Jain said in a letter to the NCDEX.
He said that to curb speculation, the margin money on lean season contracts should be raised from 25 per cent to 50 per cent while the circuit limits should be lowered 2 per cent a day.
SOPA said in a statement that in the last seven trading sessions, the soybean futures contract on NCDEX has gone up by 21.77 per cent and the upper circuit had to be applied 4 times.
Data showed that soybean rates in the spot markets have gone up by 23 per cent between the middle of June to now.
Meanwhile, the poultry and livestock industry has also complained against the sustained rise in soybean meal prices hurting their margins.
The All India Poultry Breeders Association in a representation to the government wanted immediate permission to import 1.2 million tonnes of soymeal to control the surge in prices which they claimed is impacting the poultry and livestock sector.
The poultry sector said that the average price of soybean meal has risen by 64 per cent between April and July this year which is badly hurting their margins.
“Maize prices have gone up from Rs 1,550-1,600 per quintal in Jan-Feb of 2021 to about Rs 2,100 now, while soybean meal rates have jumped from Rs 35-36 a kg to Rs 93 during the same period. Egg prices at the farm-gate level have fallen from Rs 5 per egg to Rs 4.55 during the same period,” said Sanjeev Chintawar of National Egg Coordination Committee (NECC).
Source: BUSINESS STANDARD