Soybean Weekly Report: Limited Demand And Delayed Sowing Impact Prices

Last week, soybean prices witnessed a decline due to low demand and delayed sowing, impacting both domestic and international markets. Let’s explore an overview of the key factors affecting soybean prices and insights into the market outlook.

Market Affecting Factors

1.     Decreased Soybean Prices: On 19 June 2023, soybean opened at Rs.5410 Solapur, Maharashtra, and closed at Rs.5350 on 24 June 2023 evening, marking a decrease of Rs.60 per quintal during the week. The decline can be attributed to limited demand and weakness in the international market. The plants in Madhya Pradesh and Maharashtra further reduced prices by Rs.100-150 per quintal.

2.     Weakness In Edible Oils: Weakness in edible oil prices also played a role in the soybean price fall. The United States government’s lower-than-expected biodiesel mandates resulted in processors avoiding purchasing at higher rates. This reduced soybean oil demand and put pressure on prices.

3.     Increased Soybean Exports: Despite the domestic market challenges, soybean exports witnessed a notable increase in May 2023. Exports rose by 64% to reach 2.91 lakh tons. The export growth can be attributed to improved logistics and better product quality. Bangladesh and South Korea remained the top importers of Indian soybean meal.

4.     Delayed Soybean Sowing: Soybean sowing was delayed during the monsoon season compared to 2022. By 23 June 2023, soybean was sown on only 99,000 hectares, whereas by 23 June 2022, it was sown on 1.55 lakh hectares. The Maharashtra government has instructed farmers to halt sowing until rainfall. This delay in sowing has affected the overall soybean market supply.

Market Outlook

The meteorological department predicts an increase in monsoon duration in the coming week, which will lead to improved soybean sowing in soybean-producing states. Farmers are expected to engage in soybean sowing, limiting the supply and potentially driving price increase. It is anticipated that soybean prices may see an increase of Rs.150-200.

OFB’s Insight

The soybean weekly report highlights the soybean price decline due to low demand and delayed sowing. Weakness in edible oils and lower-than-expected biodiesel mandates by the US government have further impacted the market. However, there is hope for improvement in the coming weeks with the expected increase in soybean sowing as the monsoon picks up pace. While a price increase is anticipated, the limited supply may restrict significant upward momentum.

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