June 1, 2011

 

India's 2011/12 soy area decreases due to cotton rally

 

 

Soy acreage in India appears to be lower in 2011/12 because cotton could be replacing it in some regions after it gave rise to higher returns to farmers than the oilseed, according to industry and government officials.

 

Soy is the main summer-sown oilseed crop in the south Asian country and fluctuation in output dictates India's edible oil imports, mainly of palm and soyoil, and oilmeal exports.

 

It is mainly a rain-fed crop for the world's biggest importer of edible oil, and the monsoon rains, which are expected to be normal this year, play a crucial part in deciding yields.

 

The states of Madhya Pradesh in central India, Maharashtra in the west, Rajasthan in the North West and Andhra Pradesh and Karnataka in the south, are major producers of soy.

 

"In Maharashtra, farmers are likely to cut the soy area. Cotton gave higher returns there. However, in other states like Madhya Pradesh, the soy area will remain unchanged," said Rajesh Agrawal, executive committee member of the Soybean Processors Association of India.

 

Madhya Pradesh and Maharashtra are the country's top two producing states, accounting for over 85% of total output.

 

In 2010/11, farmers planted the oilseed on 9.21 million hectares, compared to 9.79 million hectares in 2009/10, according to farm ministry data.

 

"Soy area is likely to fall in Maharashtra this season as prices of competing crops like cotton have been higher. Farmers got comparatively lower returns from soy," said Jayant Deshmukh, director at Maharashtra state farm department.

 

Farmers in Maharashtra are likely to cultivate soy on 2.53 million hectares in coming season, compared with 2.64 million hectares cultivated in 2010/11, he said.

 

Soy prices in major spot markets are now hovering around INR2,400 (US$53.36) per 100 kilogrammes, after falling to INR2,000 (US$44.47) in October, when arrivals from the new season started. Prices were hovering at around INR2,000 (US$44.47) in May 2010.

 

Cotton prices in the Indian spot market hit a record high of INR61,700 (US$1371.87) on March 30 and are now trading at INR46,500 (US$1033.91) per candy of 356 kilogrammes each, up 55% on year.

 

"In 2011, soy acreage in Madhya Pradesh is expected to be 5.6 million hectares, about 60,000 hectares more than last year's acreage," said H P Bamania, an additional director at the state's agriculture department.

 

Most Indian farmers begin cultivating soy in June after the arrival of the monsoon rains.

 

India's weather office has forecast a normal June-September monsoon this year, but industry watchers said its spread is more important for sowing and will determine yields.

 

The monsoon rains hit the southern state of Kerala two days earlier than expected, weather officials said on Sunday (May 29).

 

The Central Organisation for Oil Industry and Trade estimates soy output in 2010/11 rose 11.7% to 9.5 million tonnes.

 

"Last year I cultivated soy on four hectares. I was in a loss as I got only INR2,100 (US$46.69) per 100 kilogrammes. I was expecting a minimum of INR2,500 (US$55.59). This year, I have decided to cultivate soy only on two hectares and will cultivate turmeric on the remaining land," said Jagannath Ingle, a farmer from Washim district in Maharashtra.

 

In some pockets, lentils may eat into the soy area, but such a shift would not be large, industry officials said.

 

Indian farmers plant soy crop once in a year. The country buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.

 

India's soymeal exports are expected to rise 43% to four million tonnes in the soy crop year ending in September.