Soybean prices have been trading lull despite soybean crop loss due to the recent rainfall. Prices are likely to correct further due to higher production and carryover stock. Prices of soybean can correct to Rs 4,500 per quintal in the coming weeks.
The soybean crop has been damaged by 0.34MMT in MP and Rajasthan due to unseasonal rains. In Madhya Pradesh, one of the largest producers in the country, the soybean crop loss due to unseasonal rainfall is 192,000 MT. In Madhya Pradesh, the loss is reported in some regions of Indore, Sagar, Mandsaur, Neemuch, and Raisin districts.
About 4% of the MP’s total crop, 192,000 tonnes, has been damaged. Regions, which had the most crop damage, are Kishanganj in Indore, Kawai in Neemuch, Shahbad & Sakatpur in Raisen, Nahargarh in Mandsaur, and Bara & Karbana in Sagar.
On the other hand, if we talk about Rajasthan, the soybean crop loss due to unseasonal rainfall is 150,000 MT. In Rajasthan, soybean is mainly sown in the Hadoti region- Bundi, Baran, Jhalawar, and Kota. These four districts account for 75% of the soybean production in Rajasthan.
The soybean crop, harvested and bundled up in the fields, suffered a loss of 18-20% in these regions to the tune of 150,000 metric tonnes or Rs 675 crores as per our initial assessment. Maximum loss is reported in the Kota district, about 20-25%.
The bearish trend of the soybean, which has been consistently falling since June 2022, will not change. Despite crop loss of 0.34 MMT, soybean production for the crop year 2022-23 stands at about 12.14 MMT, which is still higher than last year’s production of 11.95 MMT by 1.60%. Earlier, our preliminary estimate was 12.48MMT for the crop year 2022-23, which we have lowered due to the current situation.
The more denting factor is higher opening or carryover stock, which is about 3.25MMT, more than four times the normal stock at the start of the crop year (Oct-Sept). Farmers not only kept soybean stock but also mustard seed stock in expectation of better realization but unfortunately, that didn’t work out in their favor. Still, half of the mustard seed production, held by the farmers and stockists, is yet to hit the market.
Moreover, mustard seed planting will pick up momentum by the end of October or the start of November 2022. If we get a higher planting area this rabi season, it will suppress the mood of the market further due to higher old stocks.
Looking forward, soybean Indore prices may remain bearish as long as trading below Rs 5390/quintal, gradually it will be heading towards Rs 4,500/quintal.
Tarun Satsangi, AGM (Commodity Research), Origo Commodities