The Indian domestic soybean price has gone up significantly since last autumn, prompting speculation that more land might be given over to the oilseed as farmers target crops that provide a healthy return.
“The domestic soybean price at Indore increased by 17.8% from 3,250 rupees (US$ 46.6)/quintal in early October 2018 to 3,830 rupees (US$54.9)/quintal as of 22nd May. These price rises are due to an increase in imported soy oil prices on the back of higher import duty (implemented in 2018) and volatility in global soybean prices,” Oscar Tjakra, senior analyst at RaboResearch Food and Agribusiness, told FeedNavigator.
He added that an increase in minimum support price (MSP) for soybean had also helped to support the domestic price, saying: “The Indian government has fixed soybean MSP at 3,399 rupees (US$48.7)/quintal as compared to 3,050 rupees (US$ 43.7)/quintal for the previous year.”
Poultry producers pick up the tab
Among those most affected by the higher prices are the country’s poultry producers, who are heavily reliant on soymeal for their feed needs.
“The current price increase will impact poultry feed prices in India,” confirmed Tjakra.
“Soymeal typically accounts for 25% of poultry feed rations and the poultry industry will continue to be highly dependent on soymeal due to the lack of alternatives. The high fiber content and the presence of euric acid and glucosinolates in cottonseed and rapeseed meal limit their usage by the poultry industry. Rapeseed and cottonseed meals are largely consumed by the beef and dairy industries.”
Planting predictions
RaboResearch’s prediction is that in 2019, farmers in India will increase plantings of soybeans, as one of the more profitable crops.
“It is highly probable that farmers will increase soybean planting as soybean gives a better return as compared to cotton and pulses based on the current price level. The domestic cotton price has declined in the last few weeks in line with a global cotton price correction. The forecast of a late monsoon arrival could help to increase soybean planting in India as well,” said Tjakra.
He declined to put a figure on the increase, saying it was “too early.” However, he did point out that last year, Indian soybean sowing area increased year on year by 6.7% to 10.8 million hectares due to farmers seeing a better return versus other crops.
Tjakra said that this should ease prices for poultry producers during the 2019 harvesting period as Indian domestic soybean supply will be set to increase year-on-year due to increased planting.
However, increased acreage will be balanced against a higher MSP and growing demand for animal protein in India, which could make for a firm outlook.
“Demand for soybean meal in India is still expected to increase year-on-year as economic growth and increasing disposable incomes have resulted in a rise of animal protein in Indian diets. While fish and seafood are the most consumed animal proteins, poultry and eggs are considered affordable and socially acceptable. This fast-rising demand has resulted in strong growth in India’s poultry industry,” he explained.
India is the fifth largest producer of soybean globally, after the US, Brazil, Argentina and China, and is forecast to produce around 11.48 million metric tons of soybean in the 2018/19 marketing year.