On Monday, Union finance minister Nirmala Sitharaman, by an amendment, reduced custom duty on masur dal to zero – the fifth notification the Central government has issued on pulses. However, lack of similar action in the case of soybean, despite repeated demand from the poultry industry and the processor industry, has not gone down well with the stakeholders, especially at a time when the commodity is trading at record high prices.
Average trade price of soybean, which has already been on the rise for some time now, crossed a historic figure of Rs 9,700/quintal at Latur’s wholesale market on Tuesday. Prices at Indore’ market had crossed Rs 10,000/quintal, another record. On the future tradings platform National Commodity and Derivatives Exchange (NCDEX), soybean is trading at Rs 9,652/quintal – rates never been seen before, according to industry sources.
More than the oil, soybean is grown for the protein-rich solid left after the oil is expelled from the seed. Called de-oiled cake (DOC), this extract acts as an important component for the poultry feed industry. Feed formulators mix 30 per cent of the DOC with 65 per cent energy component (maize or rice husk), with minerals and vitamins making up the rest. Feed for bigger animals see substitution of soybean meal with cotton seed meal or ground nut meal.
For the poultry industry, the high price of soybean is threatening to ruin the profit the traders were hoping to make with lockdown restrictions easing out and demand for chicken and eggs by the hotel and restaurant industry heading towards a gradual return to normal.
Ex farm price – the price at which poultry farmers sell their market-ready 2-2.5-kg birds -across the country is now hovering around Rs 110-120/kg. Retail prices in most cities is now in the range of Rs 270-280/kg while eggs are retailing at Rs 5.5-6.00/piece.
The gains from higher prices of chicken and eggs, however, is likely to be neutralised by the high feed prices, especially that of the DOC. At present, the cost of production of poultry birds has risen from Rs 70/kg to Rs 90/kg.
To tide over the crisis, the poultry industry has increased its demand for import of at least 20 lakh tonnes of soybean meal; some have even asked that stock limit on soybean be invoked in line with that of pulses to cool down the prices.
Soybean Processors Association of India (SOPA) has estimated that around 18.51 lakh tonnes of the oilseeds is currently with traders and farmers.
SOPA has also written to the managing director, NCDEX, complaining about heavy speculative trade on its platform. In its letter, SOPA claimed that the contract is no longer a price discovery and hedging tool. “The soy processing and even the aqua culture/poultry industry, which uses the end product i.e. soybean meal, is suffering badly because of the excessive speculation. For your information, in the last seven trading sessions, soybean futures contract on NCDEX has gone up by 21.77% and upper circuit had to be applied 4 times. Although the S&D for oil year 2020-21 is slightly tight, it does not support the kind of price rise seen in the last few months. There is no physical stock in NCDEX warehouses, which is further fuelling the speculation,” the letter read.
However, no action has been taken about soybean’s price so far.