Heavy monsoon rains have damaged India’s main summer-sown oilseed crop soybean, although the total output will still likely be higher than last year.
“We think that the output could be around 105 lakh tons, instead of 115 lakh tons that we were anticipating at the start of the season,” said B.V. Mehta, executive director of the Solvent Extractors Association of India. Last year’s production was around 85 lakh tons, compared to the annual average of between 95 lakh-100 lakh tons.
The crop damage has fuelled concerns about a possible rise in prices in the world’s largest importer of edible oils. Strong Chinese buying and lower production of US soybean have pushed up global prices to around $10/bushel.
Black sea region exports from the Ukraine are also lower, albeit Brazilian shipments are higher.
Torrential monsoon rains hit the crop in parts of the central state of Madhya Pradesh, which together with Maharashtra accounts for around 80% of the nation’s soybean production. India has seen one of the most well-distributed monsoon-rains this year, except in certain pockets.
There are concerns that a La Nina weather phenomenon over the Pacific Ocean may lead to higher than normal rains towards the end of June-September monsoon period. Early arrivals of the summer crop to markets show that the moisture content is 15%-25%, way higher than the normal 10-12%.
Soybean crop takes between 90-95 days to mature and in another 10-12 days, the pace of market arrivals is expected to pick up significantly.
“If we take a look at the long term charts, it is clearly visible that soybean futures is on an uptrend amid reports of crop damage,” said Subhranil Dey, senior research analyst at SMC Trade. He added that imports of edible oils are lower as of now, while the winter mustard crop is at least five to six months away. Imports of edible oil between November and August were about 13% lower than last year.