Soybean Crop in India Seen at Record as Rally Spurs Planting

Source: Bloomberg

Soybean farmers in India, Asia’s biggest shipper of the animal feed extracted from the oilseed, may boost planting this year as prices head for a fifth straight year of gains, potentially lifting output to a record.

Area under the oilseed may climb 5 percent to 7 percent from 10.7 million hectares (26.4 million acres) in 2012, Rajesh Agrawal, a spokesman for the Soybean Processors Association of India, said by phone from Indore. The harvest was an all-time high 12.6 million metric tons last year, he said.

Soybean futures in India have rallied every year since 2009, almost doubling in the period, as demand for the animal feedincreased from buyers in Iran, Japan and Southeast Asia. A bigger harvest may boost shipments and accelerate a decline in Chicago soybean-meal futures, which have fallen 20 percent since climbing to an all-time high in September. It may also cut cooking-oil imports by the world’s second-largest buyer.

“Area may increase in Maharashtra and Madhya Pradesh,” said Agrawal, referring to the country’s biggest growing states. “Planting should be encouraging this year because farmers have got good returns in soybeans compared with cotton.”

Soybeans have climbed 19 percent in Mumbai this year, more than the 6.1 percent gain for cotton. The area under cotton may drop this year after the weakest monsoon rains in three years deepened a water shortage in the main growing regions, showed a Bloomberg survey published April 8. Sowing begins with the onset of the monsoon in June and the crops are harvested from October.

Normal Rains

The monsoon, which brings more than 70 percent of India’s rain, was 8 percent below average last year, according to the India Meteorological Department. That’s reduced water available to irrigate crops in Maharashtra, Gujarat and Karnataka states.

Drought in some parts of Maharashtra, the second-biggest grower of soybeans and sugar cane, may not hurt planting and yields this year, Agrawal said. Madhya Pradesh accounts for almost 60 percent of India’s soybean harvest.

“Soybean needs three to four inches of rain for planting to take place and subsequently doesn’t require as much water as probably sugar cane,” he said. “If rains are normal, then we need not worry about soybean output.”

Rains will be normal this year at 98 percent of a 50-year average of 89 centimeters (35 inches) in the four months through September, the weather bureau said on April 26.

Soybean meal exports from India fell 11 percent to 3.4 million tons in 2012-2013 as farmers held back their produce in the early part of the harvesting season, the Solvent Extractors’ Association of India said. Shipments may cross 4 million tons in the year ending Sept. 30, Agrawal said.

Cutting Imports

The meal for delivery in July gained 0.9 percent to $432.10 per 2,000 pounds on the ChicagoBoard of Trade at 3:35 p.m. Mumbai time. Futures reached an all-time high of $541.80 Sept. 4. Soybean futures rose 0.7 percent to $14.8675 a bushel in Chicago today, while they advanced 0.3 percent to 3,811 rupees ($68) per 100 kilograms in Mumbai.

“A good soybean harvest will also reduce imports of vegetable oil in the country,” Agrawal said. “Output of other edible oils such as peanut and rapeseed will need to grow as well to have a bigger impact on imports.”

Cooking oil imports by the South Asian nation, the biggest consumer after China, jumped 12 percent to 5.3 million tons in the six months through April, according to the extractors’ association. India buys palm oil from Indonesia and Malaysia, and soybean oil from Brazil andArgentina.

“We are importing a huge amount of edible oil,” said Vijay Data, president of the extractors’ association. “There is good demand in the market and prices are very good, so farmers will definitely plant more.”