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Indian farmers hold soybeans as demand stabilises

Indian farmers are waiting for better prices

24 November 2021, at 10:54am

While harvest was complete some time ago, many of India's farmers are holding onto to soybeans instead of selling them to oilseed processors, hoping for an increase in prices.

As farmers continued to hold onto crop, oilseed crushing in India declined. It could force the country to increase imports of edible oils such as soyoil, palm oil and sunflower oil, reported Reuters.

Local soybean output is expected to rise by more than a tenth from a year ago, though.

At the beginning of the 2020/21 marketing year in October 2020, soybean futures were trading at around 3,800 rupees, but prices jumped to a record 10,680 rupees in August 2021 on lower output and strong demand from the poultry industry.

The price rally prompted farmers to expand soybean planted area.

But before farmers could harvest their new crops, New Delhi took a series of measures to lower soymeal and edible oil prices, including allowing the first ever imports of genetically modified soymeal and slashing edible oil import taxes.

Those steps sparked a collapse in local soybean futures to around 5,200 rupees by late October, before the market slowly recovered to around 6,600 rupees this week, or more than a third below early August levels.

The lower soy crush levels are in turn leading to lower soybean meal supplies just as feed demand from the poultry sector has recovered, said Manoj Agrawal, managing director at exporter Maharashtra Oil Extractions.

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The All India Poultry Breeders Association last week requested the government to allow imports of 550,000 tonnes of soymeal.