Soyabean Market Trends and Government Procurement Challenges

February 27, 2025

In recent months, the Indian soyabean market has faced challenges despite government interventions. The central government has procured 20 lakh tonnes of soyabean, yet wholesale prices remain stagnant. This situation raises questions about the effectiveness of procurement strategies and market dynamics.

Current Procurement Status

The Government of India has set ambitious procurement targets for soyabean, aiming for 30 lakh tonnes. However, as of February 2025, only 14.71 lakh tonnes have been successfully procured. The procurement process involves sub-agents who purchase directly from farmers, ensuring immediate payments to their accounts. Despite these efforts, the anticipated rise in prices has not materialised.

Price Dynamics

Soyabean is primarily harvested in September, with its marketing year running from September to October. In the current season, prices have consistently traded below the Minimum Support Price (MSP) of Rs 4,892 per quintal. Notably, the average price fell from Rs 5,220 in September to Rs 4,511 in November. Recent data indicates a slight recovery to Rs 4,872 in December, but prices remain precarious.

Market Reactions

Contrary to expectations, the wholesale market in Latur, Maharashtra, has seen prices drop. During November and December, the price per quintal hovered around Rs 4,200, lower than previous averages. This decline suggests a disconnect between government procurement efforts and market realities. Traders express concerns that prices may not recover soon, especially with government stocks still in play.

Export Considerations

Soyameal, a byproduct of soyabean processing, is crucial for Indian exports. Currently, Indian soyameal prices stand at $380 per tonne, slightly higher than Argentina’s $360 per tonne. However, traders doubt that increased exports will influence domestic prices. Some have proposed government subsidies to enhance export competitiveness, while others fear further price declines once government stocks are released.

Future Outlook

Analysts predict that a substantial price correction in the wholesale market is unlikely until the government depletes its 20 lakh tonnes of soyabean stock. Suggestions have been made for the government to incorporate soyabean into the public distribution system. This strategy could potentially stabilise prices by increasing demand for soyabean as a protein source.

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