INTERVIEW: SOPA head bets on normal soy area, low rains not a worry

Thursday, Jul 11


By Kaushal Verma


NEW DELHI – Acreage of most kharif crops is under threat this year due to poor monsoon rains so far. Soybean, however, may be an exception.


Even as soybean has been so far sowed on just a third of a year-ago area, Soybean Processors' Association of India head Davish Jain is hopeful the final acreage would be close to the average area of 11 mln ha.


He is betting on low-water requirement for growing soybean.


"I don't see any major problem as far as soy acreage is concerned…I expect normal sowing to take place," Jain told Cogencis in an interview.


Farmers are likely to opt for soybean instead of other crops, given that it is a sturdy crop and promises better returns, Jain said.


Monsoon rains arrived later than usual in key soybean growing areas of Maharashtra and Madhya Pradesh, and overall rains in the country were 33% below normal in June. Hence, till the end of last week, soybean was sowed across just 1.68 mln ha.


Jain said he expected soybean sowing to catch up with the year-ago level of 10.8 mln ha, as the crop can be sowed till the end of July.


According to agricultural scientists, soybean needs just 1-2 rounds of irrigation; competing crops such as cotton, paddy and sugarcane need far more. The oilseed, grown largely in un-irrigated areas, can also survive on a small quantum of rainfall, provided it is at regular intervals, and even then give optimal yields.


Good returns from soybean this year, too, are likely to encourage farmers to choose the oilseed over other crops. Soybean is one of the few crops for which prices were higher than the support price this season. Soybean prices in Indore, a key wholesale market, have risen by about 18% since the start of the arrival season in October to 3,800-3,880 rupees per 100 kg, largely due to local demand. The prices are also higher than the minimum support price of 3,399 rupees.


While there is no concern over the acreage yet, a key thing to watch out for would be long breaks in the monsoon rainfall. "Some delay is okay…(but) it should not happen after sowing," Jain said, adding that a prolonged dry spell could dry up the newly-germinated crop and hurt yield.


Private weather forecaster Skymet has warned that the monsoon current may be headed for a break over most parts of the country after mid-July.


To tackle the possibility of low rains this year, the government has asked farmers to adopt early maturing varieties of soybean such as JS 9560 in Madhya Pradesh and JS 335 in Maharashtra.


While Jain was quite confident that soybean acreage would catch up, he wasn't that sure about production. "(It's) too early to talk about productivity. It will be based on how monsoon pans out," he said.


The country had produced a bumper 11.48 mln tn soybean crop in 2018-19 (Jul-Jun), much higher than 8.37 mln tn in 2017-18, according to SOPA estimates.




Despite a larger soybean crop in 2018-19, India's crude degummed soyoil imports are likely to increase marginally to around 3 mln tn in the current oil year ending October, due to cheaper prices offered by Argentina and Brazil, Jain said.


Soyoil imports are seen rising despite tougher competition from much cheaper palm oil imports from Malaysia.


On Jan 1, the government had slashed the import duty on crude and refined palm oils to comply with preferential tariff pacts with Asian countries. The import duty on crude palm oil originating from Malaysia was cut to 40% from 44% while for refined palm oil it was reduced to 45% from 54%.


"We have requested the government to renegotiate with Malaysia and bring back the previous duties. It's counterproductive to Indian economy. They should do away with such reductions to save industry," he said.


Lower duties have resulted in an increase in refined edible oil imports, which is hurting the domestic refining industry.


India's import of refined edible oil rose to 1.57 mln tn during Nov-May from 1.14 mln tn a year ago, while imports of crude edible oil fell to 6.81 mln tn from 7.26 mln, according to data released by The Solvent Extractors' Association of India today.




India's soymeal exports have been dismal since April due to waning demand from major buyers as Indian soymeal at $470-480 a tn, free on board, is about 20% costlier than other origins, Jain said.


Overseas shipments, however, are likely to pick up over the next couple of months.


"Exports were weak in June but may revive in Jul-Aug as farmers will dispose of their stock in spot markets after completion of sowing. The inflow of raw material (in spot markets) will become stronger," he said. 


Higher supply could cool off domestic soybean prices and make soymeal competitive in the global market.


Demand from Iran, too, is likely to revive over the next few months and aid overall soymeal exports from India, he said.


Iran was a major buyer of India soymeal but sales to that country have hit a roadblock due to the US tightening sanctions on Iran.


"They (Iran) trade in rupee…we were buying their crude oil and they buy our soymeal, sugar or basmati. Now crude oil trade stopped due to US sanctions and there is ambiguity over exports of other commodities to Iran," Jain said, adding that discussions with commerce ministry are on to address this issue. 


SOPA has requested the government to ask Iran to increase allocation of Indian rupees to their importers so that they can buy soymeal and other commodities from India. 


During the first nine months of 2018-19 (Oct-Sep) marketing year, India's soymeal exports were at 1.81 mln tn, up form 1.44 mln tn in the year-ago period, according to SOPA data. Iran bought 23% of total soymeal exported during Oct-Jun.  End


US$1 = 68.44 rupees

Edited by Akul Nishant Akhoury


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This copy was first published on the Cogencis WorkStation

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