Speculators fuelling soybean prices: SOPA

SOPA blamed the futures market for underestimating the crop size, which it said has pushed up prices 20% in a month. Soybean prices are trading around Rs 4,070 a quintal currently.

Mumbai May 5, 2015: The Soybean Processors Association of India (SOPA) has revised downwards the estimate of damage to soybean crop due to recent rain. The body now expects the damage to be around 10 million tonne from 10.4 mt earlier.

SOPA blamed the futures market for underestimating the crop size, which it said had pushed prices up 20 per cent in a month. Soybean is around currently Rs 4,070 a quintal.

It said speculators in the futures market were quoting abnormally low figures, hurting the fortunes of processors and their margins.

The association also said there was no change in crop estimates for Madhya Pradesh, Rajasthan and other states, except Maharashtra where the crop size was revised to 2.6 mt.

“We are looking to protect the long-term interest of processors, not only a few large ones. Heavy speculation and manipulation of prices in the futures market through National Commodity and Derivatives Exchange (NCDEX) is hurting the entire trade. Futures influences market sentiments through unfounded rumours of lower crop size, bad weather and other unfavourable conditions resulting into unrealistic rise in prices, which needs to be stopped,” said Davish Jain, president, SOPA.

However, NCDEX clarified, “Soybean futures contracts on the exchange platform have attracted wide and active participation from all segments of the value chain participants, including manufacturers and exporters. The exchange is constantly monitoring the trading on its platform and shall take appropriate action in case any irregularities are noticed.”

Further, “Futures prices are based on underlying fundamental factors. Recent price movement in the futures prices for soya appear to be in response to recent developments in the demand-supply dynamics”.

SOPA said heavy speculation, tax evasion by a few unscrupulous companies, very low prices of soybean oil in the world market and the historically low landed price in India are hurting the business of soybean processors.

The body has suggested making physical delivery mandatory for a certain percentage of the futures contract, increasing the margin money and temporarily suspending futures during the off-season when the speculation is at a peak.

Jain said that, SOPA will again approach the Central government to increase import duty on soybean oil from current 7.5% to 17.5% because there is a likelihood of carry over stock in the coming season”. 

Courtesy: Business Standard