Soybean output in India witnessed a sharp decline in 2013-14 due to vagaries of weather. Despite an increase in the under the oilseed and a favorable start to the southwest monsoon, final output fell as extended monsoon and unseasonal rains in the major soybean producing states of Madhya Pradesh and Maharashtra led to a severe damage to the standing crop. According to the Third Advance Estimates released by the Ministry of Agriculture, Soybean output for 2013-14 is pegged at 11.948 million tonnes as against 14.67 million tonnes last year and the Ministry's earlier estimates of 15.681 million tonnes and 12.448 million tonnes respectively.
Amidst IMD's forecast of below normal rains for the four month Southwest monsoon season, soybean sowing for the 2014-15 crop year has commenced. According to the data released by the Ministry of Agriculture, about 10,000 hectares have been covered under soybean as on 11th June, 2014. There was no sowing reported during the corresponding period last year. Sowing of soybean has started in Karnataka which has received enough rainfall required for sowing operations. However, sowing is yet to start in the largest soybean producing states of Madhya Pradesh and Maharashtra, as farmers are waiting for sufficient rains to make to ground fertile.
The country is facing an acute shortage of soybean seeds this year and is estimated about 20 percent lower than the demand. According to the Ministry of Agriculture, the country's requirement stands at about 342,906 tonnes quality hybrid soybean seed, while the availability stands around 273,289 tonnes, leaving about 69,617 tonnes short.
Demand for soy meal exports from India have fallen sharply during the current marketing year largely due to unattractive quotes from India compared to the overseas markets. Higher soybean prices along with strengthening of the Indian Rupee made Indian soy meal more expensive. Exports of soy meal in the first two months (April and May) of the financial year 2014 have declined 49.93 percent to 98,109 tonnes from 1,95,943 tonnes during the corresponding period last year. The major exporting destinations were Iran, France, Europe, Sri Lanka, Indonesia and Malaysia in the month of May. India exported 2.78 million tonnes of soy meal in 2013-14, compared to 3.44 million tonnes in the preceding year.
We expect soybean prices to continue to remain in the grip of the bears in the days to come. Weak demand for soy meal exports from the overseas markets leading to lower demand from the solvent extractors are expected to mount downside pressure on the prices. Weakness in the overseas markets on the back of expectations of a record output in the US may also add to the downside pressure. Supplies from South American nations also continue to remain comfortable. The spillover effect of the same could be seen on the domestic soybean prices.
However, sharp downside in the prices may be restricted. Lower availability of soybean seeds for sowing may impact the area covered under the oilseed. Sowing for the new season is yet to commence in the major producing states of MP and Maharashtra. Also, southwest monsoon forecast for 2014 is expected below normal, with 60-70 percent chances of El Nino conditions, the eventuality of which may impact the yield and may lead to a decline in the output.
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