Why are soybean wholesale prices so low, and why haven’t government purchases helped?

20 lakh tonnes (lt) soybeans have been purchased by the central government so far but it has not had much impact on the market wholesale prices. Produced on more than 129. 35 lakh hectares, most of the crop has not reached the market so far. Why have prices not gone up in spite of government intervention?

Soybean prices this season were below the government’s MSP of Rs 4, 892/quintal even before farmers had harvested the crop (in September 2024).

The National Cooperative Consumers Federation (NCCF) and National Cooperative Agricultural Marketing Federation (NAFED) had set the target of buying 30 litres each across the country. NAFED has so far bought only 14. 71 litres. As of February 24, operations have stopped in six of the seven states (except Chhattisgarh).

8. 46 lakh farmers will benefit from Union Agriculture Minister Shivraj Singh Chouhan’s 19. 91-litre oilseed procurement deadline of February 9.

The crop was bought by the government from sub-agents who in turn bought it from farmers, and farmers were paid directly into their bank accounts.

When the government moved to start procurement, the expectation was that wholesale markets would respond and prices would increase.

So, did the markets react as anticipated?

But it was the opposite in the case of wholesale prices at one of the country’s largest wholesale markets for the crop — the soyabean market at Latur in Maharashtra.

Compared to the previous average price of Rs 4, 380/quintal, soybeans per quintal stood at around Rs 4, 200 for the major part of November and December. Quintals are now being sold at Rs 4, 100-4, 150.

Estimates from the Soyabean Processors Association (SOPA) in Indore said that as of February 1, 57. 40 litres out of the 134. 76 litres of produce was lying with farmers or traders.

Now that the procurement window has ended, traders don’t expect prices to go up in the coming days. Government stocks of soybeans amount to 20 liters, SOPA said.

When will it get better and why are prices so low?

Export of soyameal -- the protein-rich residue left after oil is pressed out of the seeds -- is key for Indian traders.

The average price per quintal fell to Rs 4, 867 in January and again climbed to Rs 4, 872 in December, which was very close to the MSP, Agmarknet data showed. Argentina is the world’s largest exporter of soya meal and its exports are shipping at $360 per tonne now while those from India are selling at $380 per tonne (ex Kandla port).

Even if exports do increase, however, traders say prices are unlikely to go up much. Some traders have asked for subsidies to boost exports, while others said that once the government began to sell off its stock, prices could move south again.

But wholesale market prices will not be able to correct significantly till the government’s 20-litre supply is exhausted, said Dipak Chavan, an agri-commodities analyst based in Pune