THE RISING cost of soyabean has led processors of the oilseed join hands with the poultry industry to press the panic button and ask for immediate steps to control speculative trade at the exchanges.
In a letter addressed to Ajit Tyagi, chairperson, Securities and Exchange Board of India (SEBI), Solvent and Extractors Association of India, the industry body involved in the trade of the vegetable oil, asked the board to take immediate steps to control speculative trade in the oilseed in the futures trading platform of National Commodity and Derivatives Exchange (NCDEX).
Soyabean prices at Maharashtra’s Latur market, a major mandi for the oilseed, is trading between Rs 6,900 and Rs 7,000 per quintal.
Since October 2020, just about when the new crop was hitting the market, Soyabean Processors Association of India (SOPA) wrote to SEBI asking for a halt on future trading of the oilseed.
The premier body of soyabean processors said this was necessary to control “mindless speculation” in the derivatives market. The SOPA’s estimates have put the national production of soyabean at 96.71 lakh tonnes. Between October and March 2021, the country has reported the arrival of 74.75 lakh tonnes in markets for crushing. The SOPA’s estimates stated that 36.64 lakh tonnes of the oilseed still remains with farmers, stockists, traders among others.
Atul Chaturvedi, chairperson of Solvent and Extractors Association of India, in his letter pointed out how speculative activities in the last month have seen the price of the oilseed on NCDEX’s platform reach Rs 7,250 per quintal from the then previous Rs 5,750.
“It is hard to fathom what has changed so dramatically in such a short period of time to warrant this unprecedented upswing in prices,” the letter read.
Chaturvedi said solvent and extractors were unable to crush the oilseed for their business due to steep increase in prices.
He also pointed out that along with the oil industry, the poultry industry was also feeling the pinch due to this abnormal rise in the prices. The poultry industry is a major consumer of soyameal, the protein-rich substance left after the oil is expelled from the seed.
Soyameal forms the protein part of feed and, unlike other livestock transition to other protein-rich meal like cotton seed cake or mustard seed cake, it is not possible for the poultry industry. This is mainly due to the physiology of poultry birds.
Chaturvedi said the abnormal price rise was mainly due to speculative activities in the future markets. “With futures market delinked from physical market, seriously impacting price discovery, we would request SEBI to examine the current scenario and take whatever suitable action is required to maintain the orderly development of the market,” the letter read.
This would be the second time such a letter has been written with regard to soyabean prices. Earlier, All India Poultry Breeders and Farmers Association wrote to the Prime Minister asking for a similar intervention.