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India's 2021-22 soybean output seen sharply lower on year: Platts survey

Highlights

Soybean harvest seen falling 17% to 10.8 million mt

­­Output seen declining on erratic showers, likely poor yields

Soybean oil imports seen rising

India's soybean production may decline sharply in the marketing year 2021-22 (October-September) as erratic rainfall during the sowing season affected yields, according to a survey by S&P Global Platts. A poor soybean crop could increase India's reliance on edible oil imports and endanger its exports of soybean meal in the coming months, analysts said.

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India's soybean production in MY 2021-22 is expected to be around 10.8 million mt, nearly 16.6% lower on the year, an average estimate of 13 analysts and traders showed. India harvested 12.9 million mt of soybean in MY 2020-21, according to ministry of agriculture.

Soybean, the largest-grown oilseed in India, is sown in June-July and harvested in September-October. India's agriculture ministry is expected to release its production estimates later this month.

The likely decline in the output is primarily due to an expected fall in yields due to erratic showers, analysts said.

According to India's ministry of agriculture, planted area under soybean was at 12.2 million hectares in 2021-22, slightly higher than 12.1 million hectares in 2020-21.

However, the area in Madhya Pradesh, India's primary soybean growing state, was nearly 5% lower on the year at 5.6 million hectares, according to the ministry data. Madhya Pradesh usually produces 6.5 million mt of soybeans in a year.

"Market participants see the planted area to be lower than the government's estimates due to a lack of rainfall during the crucial sowing season," said an official with an edible oil trading firm.

Meanwhile, the Soybean Processors Association of India pegged the total planted area under soybean at 11.6 million hectares.

According to the association, over 41% of soybean crop planted remains in good-to-excellent conditions. It has also projected that crop over 13.8% of the planted area is in poor condition, with Madhya Pradesh accounting for 55% of it.

"The poor condition of the crop is primarily due to poor rainfall across key producing regions," an official with a multinational trading firm said.

According to the India Meteorological Department, monsoon rains in India during June 1 to Sept. 15 were 4% lower from the average. In Madhya Pradesh, rainfall was 5% lower from the average during the same period.

Trade outlook cloudy

India's soybean oil imports may climb in the coming months due to the likely fall in production. India is the largest importer of soybean oil in the world. An expected tighter supply has also forced India, that usually exports soymeal, to import.

For MY 2021-22, India's soybean oil imports are projected at 3.3 million mt, said B V Mehta, executive director of Solvent Extractors' Association of India, a pan-India vegetable oils trade body. Between November-August, India imported 2.4 million mt of soybean oil.

India's marketing year for edible oil trade runs from November through October.

Over the past few years, India's soybean oil imports have seen a gradual decline on account of rising domestic soybean production.

However, imports may see a sharp jump in the next marketing year starting in November as the national edible consumption is projected to increase 1 million mt to 22 million mt, Mehta said at the World Palm Virtual Expo and Conference 2021 on Sept. 8.

According to the US Department of Agriculture, India's soybean oil imports are seen at 3.7 million mt for MY 2021-22, up from 3.6 million mt projected for MY 2020-21.

"If the [soybean] output declines sharply, it may lead to a jump in soybean oil imports in the next season," said a Mumbai-based edible oil importer.

However, some in the trade circles are also of the view that importers may choose to buy palm oil or other cheaper edible oils to compensate the likely fall in supply of soybean oil.

"A fall in soybean production is not very likely to increase soybean oil imports next year because India prefers buying cheaper varieties like palm oil and also has a preference for blended oils," said Gaurav Jain, founder of AgPulse Analytica.

Apart from the likely increase in soybean oil imports, India's soymeal sector can also face trade challenges.

For the first time, the Indian government has also allowed 1.2 million mt of genetically modified soymeal in a move aimed at plugging the country's existing supply shortfall.

India, that usually exports soymeal, has turned to imports amid soaring prices.

On India's National Commodity and Derivatives Exchange, high-protein soybean meal prices peaked to Rupees 93,000/mt ($1,265/mt) on Sept. 15, more than double on the year.

"Lower soybean crop and high international prices of soybeans will result in India importing soybean meal in the next season as well," Jain said.