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Soybean Prices Likely to Remain Firm in Coming Months; Advise for Farmers

Domestic Soybean outlook for the coming quarter appears positive from pricing perspective on the back of improving global soymeal demand prospects and positive price view for edible oils like palm oil and Soyabean Oil. Lower crop estimates of domestic soybean versus current estimates will be another price rise favoring factor, in addition to festive related purchases to pick up soon.

Abhijeet Banerjee

Soybean prices in India has been moving in a moderate price band of 3600-3950 since and the break above 4000 was noted in the month of August especially when news above crop damage in MP came out., in addition to improving outlook for RM seed and edible oils like Soya oil and CPO. Prices till early part of August faced difficulty in sustaining above 3800/3900 amid estimations of higher supply Indian soybean, in addition to upgraded global supply estimates.  

World markets had also faced a severe downward trend till March month, and before the rally this year, the commodity had suffered from significant fall in demand, caused by the coronavirus and swine fever in China, forecasts of global oversupply, and a stronger U.S. dollar. Global markets rebounded after March in response to a weaker U.S. dollar this year, combined with dry weather conditions in the U.S. Midwest, strong Chinese demand, the reopening of meat-processing plants, and a reducing threat of swine fever in China.  Earlier this year, the meat-processing plants around the world had been forced to shut down to stem the spread of Covid-19, plunging demand for livestock and hogs and leading to reduced soybean demand for animal feed. 

Global markets rebounded after March in response to a weaker U.S. dollar this year, combined with dry weather conditions in the U.S. Midwest, strong Chinese demand, the reopening of meat-processing plants, and a reducing threat of swine fever in China. Earlier this year, the meat-processing plants around the world had been forced to shut down to stem the spread of Covid-19, plunging demand for livestock and hogs and leading to reduced soybean demand for animal feed.  

Global soymeal market overview: 

Global protein meal use for livestock feed is expected to continue recovering in 2020–21 as China's pig numbers rebuild after African swine fever outbreaks. This is expected to lift soybean and canola demand. The COVID-19 pandemic has constrained growth in the otherwise strong global demand for meat. China has imported noticeable quantity of soybeans from Brazil between January and July 2020, with maximum imports during June. As a result Brazilian soybean average offers have remained higher compared with US soybeans since May 2020. This is when the Brazilian harvest started reducing. The new US marketing year began in September. In 2020–21 Chinese demand is projected to shift back from Brazilian to US soybeans, therefore resulting in improvement of US exports.  

The temporary closure of some US slaughterhouses because of COVID-19 has increased demand for meal to feed a backlog of animals ready for slaughter. Therefore feed demand in near future is likely to be strong. In Australia, soymeal imports are important for the poultry industry particularly, since this commodity has a wider preference in chicken feed owing to higher protein content. Historically, Argentina supplies soymeal to Australia. But due to disruptions to the largest processing plant in Argentina and reduced supply from Argentina (because of increase in export taxes), Australia is now importing soymeal from the United States and poultry demand has stabilized in the country.  

Going by the recent forecast reports of US Department of Agriculture, India’s soybean crush is forecast to improve by 1.1 million to 9.4 million tons, since a larger crop is expected in 2020-2021. Therefore India’s soybean meal exports are expected to gather momentum and rebound by 4.2 Lakh tons to 1.9 million tons. This year global soybean consumption is also expected to increase and China is projected to account for over half of global consumption growth in 2020/21 and roughly 85 percent of import growth. Argentine soybean exports are projected to decline, considering strong competition from the United States and Brazil, in addition to growing crush of Argentina.  

Soymeal demand prospects improving: 

The USDA had also projected global soybean meal consumption growth to accelerate by 4 percent on growing China demand. China accounts for nearly one-third of global consumption and more than half of growth in consumption. Global meal exports are forecast to grow 1 percent in 2020/21, near historic trends. Argentina and India are projected to meet most of the growth in trade in 2020/21 as rising feed demand in the United States and Brazil will account for nearly all of the increase in their meal production. India’s export estimate for 2020-21 is now projected higher at 2.07 MMT versus last year’s export estimate of 1.45 MMT. With lockdown restrictions being eased, further improvement of poultry demand in forthcoming year shall depend largely on caterers, hotels, restaurants or roadside dhabaas, resuming normal services. Considering all these facts, prospects of global/domestic soymeal demand is most likely to improve next year, and the consumption scenario seems to remain better in 2021, as compared to this year at least. Seasonally, CBOT soy complex normally trades with firm tone between December and April months every year and this trend has been observed more than 60% when analyzed for a 20-30 year time period. India’s balance sheet for soymeal (Figures in Lakh Tonnes) is given below:  


Beginning Stocks 





Ending Stocks 















Source: USDA 

The figure above mentioned indicates better export prospects for soymeal from India over last year and as a result lower ending stocks expected year on year.  

India’s soybean production may be lower than current projections:  

Despite a higher supply outlook of the Indian crop, the current set of estimates does not seem accurate the USDA or GOI reports have not taking in consideration, excessive rainfall impact in MP and Maharashtra during the last week of August and later part of September respectively. The Soybean Processors Association of India (SOPA) had anticipated a crop damage of 10-12% on account of heavy rains in Madhya Pradesh (MP) a month back. Based on current developments and ground level market feedback, we expect a lower revision of domestic Soybean crop versus last year, in subsequent USDA report/SOPA/India’s Agriculture Ministry reports. If such revisions occur then chances of rise in prices from a longer term perspective shall improve further.  

La Nina developments can lower next year’s global production:

With the development of a La Niña climate pattern, global supplies of soybeans may get even tighter, ultimately resulting in lower production. La Niña is a weather pattern in the Pacific Ocean that is the colder counterpart of the El Niño phenomenon and can have a significant impact on weather thereby affecting crops across the world. Dryness associated with La Niña in the United States, southern Brazil, and Argentina tends to negatively affect soybean, corn, and wheat production.  In case of lower soybean production, price may provide a further boost next year, which have already risen significantly recently on growing demand from China and prices climbing to their highest levels in over two years. 

Price outlook and advice for farmers: 

There are expectations of demand to improve in retail markets ahead of the festive season, while export prospects in Soymeal are improving. The Indian soybean crop estimate currently seems over estimated as the USDA has not taking in consideration, excessive rainfall impact in MP and Maharashtra during the last week of August and later part of September respectively. Therefore actual production might be lower than estimated currently. This will be an additional bullish price driver in coming months. Near term price view in edible oils specially Soya oil and Palm oil are positive and shall continue support chances of further rise in soybean prices. But the upward upside may be restricted till November at least, due to the approaching harvest season and the supplies will be higher than last year. From supply perspective it should be noted that the USDA in its latest demand-supply report had increased its global ending stocks forecast by 300,000 mt to 95.4 million, with higher global soybean production mostly offset by higher use in 2020-21, mainly in China. Overall supplies in coming months will be sufficient in checking any abnormal price appreciation in global soybean prices.  

On the whole prices are expected to remain slightly firm for next few weeks followed by a moderately downward trend between Middle of October to end of November. By First or Second week of December, sharp upside rallies can occur which can continue till January or February. Farmers should monitor the price levels of the new season crop in coming weeks and any level between 3700-3750 will be worth purchasing between months October and November. Chances of prices to move as high as 4500-4600 are currently predicted by analysts/industry persons. Farmers can hold till December/Mid-January and start selling their produce thereafter.  


Beginning Stocks’ 19-20 





Ending Stocks’19-20 

Ending Stocks’20-21 








Global Soybean Figures in Million Metric Tonnes, Source USDA  

Beginning Stocks’ 19-20 





Ending Stocks’20-21 







Domestic Soybean Figures in Lakh Tonnes, Source: SOPA, Trade Sources, Media Reports 

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