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Thursday, October 15, 2015

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Photo: Sahul Trading
Raising serious concern on the huge upsurge in the prices of soyabean futures,  which in turn is leading to increase in physical soybean prices as well, the Soyabean Processors Association of India (SOPA) has urged the Securities Exchange Board of India (Sebi) to immediately put a stop to futures trading in soyabean seed.

In a letter to Sebi Chairman UK Sinha, chairman, SOPA has alleged that ‘unscrupulous operators’ are rigging prices of the commodity which has hit the processing industry. Rampant speculative activity by a few vested interests has made it prone to their market domination and genuine players have been sidelined, the body said. The speculation is not only ruining the soyabean industry but also adversely affecting domestic users in  poultry,  fisheries and aquaculture and livestock feed industry, which are major feed users, SOPA has stated in the letter.

The upward price movement between September 1, 2015 and Tuesday is about 14%, which has no justification whatsoever because the new soyabean crop has just started arriving and this is the peak season for soyabean harvest and arrivals and prices during October and December always remain subdued, Davish Jain, chairman, SOPA mentioned in the letter.

The current rally is driven by speculators and it has become the nature of the market that now physical market is following the futures rather than the other way round.

“The net effect of this speculation driven price rise is that the soyabean industry is suffering from huge disparity in crushing. Not only are we not able to export soyabean meal, we are also finding it difficult to sell in the local market because of high prices,” he said.

“More than 50% of the soyabean crushing plants have already closed down due to this speculation-driven price manipulation by just a few unscrupulous operators and we are afraid that if this is not checked very soon, the entire industry will have to shut shop,” Jain said.

The consequences of this will be disastrous for the farmers who depend on the industry to sell their produce, he said, adding that no industry can survive if it has to buy raw material at unreasonably high price and the ultimate sufferer will be the farmer  if there are no buyers for soyabean. The industry is in crisis and closure of futures trading is the only way out to make the soya processing industry survive in these critical times, the association said.

At the AGM of the association held last week members were of the unanimous view that if the industry has to survive, there should be no futures trading in a commodity which is already in short supply.
There are currently about 117 soy processing plants in the country with a combined crushing capacity of 250 lakh tonne per annum. The industry produces goods worth R35,000 crore and exports products worth R15,000 crore per annum, mainly soybean meal.

There are about 8 million farmers engaged in soyabean cultivation who are dependent on the soybean industry for disposal of their produce.

SOPA has said that the body has repeatedly expressed serious concern at the highest level with FMC and Futures Exchanges since April-May 2015, regarding unrestrained and ubridled business speculation in soybean seed futures contracts.

Soybean production in the country is expected to fall by 3.97% for the season of 2015. SOPA says production estimates of soyabean during kharif 2015 is 86.426 lakh tonne, which is 3.574 lakh tonne  lower by 3.97 % as compared to previous years revised estimates of 90 lakh tonne.

The carryover of soyabean from last year is estimated at 9 lakh tonne.

The current annual production of soyabean  in the country is around 100 lakh tonne from cultivation in 110.656 lakh hectares.  India has been tradtionally exporting approximately 60-70% of total soymeal output.

The value of exports in 2013-14 was Rs 15,000 crore.

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