Customs duty hike on edible oil imports may also perk up domestic prices
Encouraging returns last year and normal monsoon outlook for this kharif season has brightened the prospects for soyabean cultivation starting next month.
While the trade has pinned hopes on the increased acreage this year for the oilseed, it is also counting on government assistance in terms of hiking customs duty on import of edible oils.
Davish Jain, Chairman, Soybean Processors Association of India (SOPA), underlined the need to hike the customs duty on edible oils by 10 per cent so as to support domestic oil industry and encourage farmers to opt for oilseeds.
“Next month we are starting plantation (of soyabean) and the monsoon is likely to be on time. Currently, prices are below the minimum support price (MSP). This is the time for the government to hike the customs duty on imports of edible oils, so it may lift domestic prices,” said Jain.
Soyabean prices were last quoted at around ₹3,600-3,900 per quintal in Bhopal markets, which is mostly below the MSP of ₹3,710. The prices dipped to ₹3,400 last year around the same time and later hit a high of ₹4,176 in January 2020. Last year, soyabean provided better returns than other commodities.
Jain said, “A hike in customs duty would
mean the government can look for about ₹7,500 crore in additional revenues.”
Meanwhile, the trade body has estimated exports for the year 2019-20 (October 2019 to September 2020) to fall by one lakh tonnes to 6 lakh tonnes. “The Covid-19 has had a serious impact on the poultry and soyabean processing industry and many of our past estimates have gone completely awry,” SOPA had said earlier. It also noted that the crushing activity for the oil year 2019-20 has fallen by 8.5 lakh tonnes to 69 lakh tonnes with domestic meal consumption reduced by 5 lakh tonnes to 45 lakh tonnes. The trade body estimates carryover stock to rise to 13.26 lakh tonnes at the end of September.
The markets haven’t opened in many regions. But as the trade expects markets to resume operations after the lifting of the lockdown, farmers are likely to flush the market with the stocks available with them.
“As per our estimation, it is about 4 million tonnes as on May 1. This is considerable quantity for the next five months. And without exports we can’t consume that quantum till the end of the season. So, in this case, we may be left with a good amount of carry forward stock for the next season,” Jain stated.
In a research report on Tuesday, Kedia Advisory stated, “Soyabean yesterday settled up by 0.21 per cent at 3,812 tracking firmness in overseas prices as purchases by the world’s top importer China underpinned the market and due to supply concerns in retail markets because of the lockdown.”
Analysts have underlined that China’s April soyabean imports fell 12 per cent from a year earlier after bad weather delayed cargoes from top supplier Brazil. China, the world’s top soyabean buyer, brought in 6.716 million tonnes of the oilseed in April, down from 7.64 million tonnes a year ago.
The analyst note stated Chinese buyers booked deals to purchase 378,000 tonnes of US soyabeans.
Source: Business Line