May 1, 2012
Due to increased acreage under cultivation, India's kharif season crop output for 2012-13 is expected to witness higher soy production.
The area under soy cultivation in the country has increased from 9.33 million hectares in 2011-12 to 10.26 million hectares and the increase acreage has mainly seen in Maharashtra, Rajasthan, Tamil Nadu and Andhra Pradesh.
According to estimates, soy production may rise by 8-10% in the kharif season. This is likely to provide relief to the domestic crushing industry because the mills are on the verge of closure due to non-availability of oilseeds for crushing. Last year, soy production was recorded at 10.5 million tonnes.
As per Soy Processors Association of India (Sopa) estimates, this year, total harvest may move up to a record 11.9 million tonnes. Sopa is optimistic that Indian farmers may plant at least 5% more area for the crop next season after prices climbed to a record. Acreage under the crop will increase from 10.3 million hectares to 25.5 million hectares in the year ending June 30 as planting intentions are encouraging.
Speculations are ripe over a likely dry weather in Brazil and Argentina that could trim global oilseed output. And, this in turn, may boost demand for supplies from the south Asian markets, analysts pointed out. Analysts have no doubt that higher international prices and record rates in the domestic front will result in higher plantings and should be good for soy meal exports.
Religare Commodities, in its latest report, said, "Soy prices remain firm in the domestic as well as international market on continued buying support. Each day, a new high is seen due to buying support. Chinese import demand has supported the international market. Further, significant reduction in soy production in South American countries like Argentina and Brazil has given enough support to the bulls."
In India, expectation of normal monsoon this year brightens kharif crop production prospects. Madhya Pradesh and Maharashtra are the main soy growing states and sowing starts somewhere during late June-July. This year, soy proved to be very lucrative and all-time high market prices are seen, which can encourage farmers to increase the area under cultivation for the crop. In fact, in the Maharashtra region, the soy area can increase at the expense of cotton, which proved to be less lucrative compared with oilseeds, such as soy and groundnut, Religare Commodities said in its outlook for soy.
In Indian spot markets, traders have a positive outlook for soy prices. Traders feel that a good soymeal demand and limited supplies will keep supporting prices. They also expect soymeal demand from Iran to continue over the coming days. Lower output in Argentina and Brazil is supporting commodity markets worldwide, anyways. Prices will also get good support from reduced global production, traders feel.
