December 18, 2003

 

Soybean Prices in India Accelerate On Rising Demand

 

Soybean prices in India continue to accelerate on rising demand from the processing sector and restricted imports. 

 

Last week, soybean prices hovered around Rs 14,500-15,000 a ton; this week prices have shot to Rs 15,500-15,600.

 

"The prices are fluctuating in line with the global trend. Demand from the processors is also driving them up," Soyabean Processors Association of India (SOPA) sources said.

 

In the global market, soybean prices are ruling firm, though they have tended to decline on sales by speculators. Soybean on the Chicago market has dropped by 12 cents since Friday to $7.64 a bushel (27.2 kg) or Rs 9,900 a ton.

 

"The arrivals are now restricted to 2-lakh bags (of 60-kg) daily from 5-6-lakh bags during the peak season" the SOPA source said.

 

Mr B.V. Mehta, Secretary-General, Solvent Extractors Association of India said, "Arrivals are restricted since the farmers do not want to sell the entire stocks with them. They are in no hurry to sell."

 

Also big traders had stacked up adequate quantity, he said, adding that with the processing sector looking up, there was a good demand.

 

"The good oilseeds crop, especially soybean, will ensure at least 8 to 10 months supply. That has got the processing units going," the SOPA source said.

 

"The prices are firm as whatever comes to the market is being picked up," Mr Mehta said.

 

Market observers say the prices could stabilise around this level as the futures prices are ruling at Rs 15,200 a ton for January and Rs 15,300 a ton for February.

 

"We would not be able to comment on the price as it will depend on a number of factors," Mr Mehta said.

 

"But if the prices tend to crash, then arrivals may increase," he said.

 

He said usually, the farmers would produce five tons of soybean and sell 3-4 tons.

 

But this time, they had produced eight tons and sold three tons and got adequate money.

 

SOPA sources said the price rise was not a concern for the processors. "The parity is there," they said.

While processors were also gaining by the demand for soy meal from South, South-East and Far-East Asia, they still faced shortage in food grade hexane and availability of railway wagons.

 

Currently, Indian soy meal is quoted at a competitive $250-252 a ton (around Rs 11,500) free-on-board and nearly 18 lakh tons have been contracted for exports.

 

"Unscheduled shutdown of Bharat Petroluem Corporation Ltd plant and Chennai Petroleum unit has caused a shortage. The issue has been taken up with the Petroleum Ministry and we have been assured of adequate supply," Mr Mehta said.

 

Food grade hexane is used for extracting oil and cake from the bean. Usually, stocks of hexane are available but with these units shutdown in September, the industry was left with zero inventory.

 

"At that time, most solvent extraction units were sick. But with the oilseed sector looking up, they are back at work," Mr Mehta said.

 

As regards shortage of railway wagons, Mr Mehta said the industry had taken up the issue with the Railway Ministry. "Still the problem exists," he said.

 

SOPA sources said the issue was availability of empty wagons, especially in Ratlam and Bhopal divisions in Madhya Pradesh.