Soybean Output to Rise as India Drought Spares Crop (Update1)

By Thomas Kutty Abraham

Sept. 23 (Bloomberg) -- Soybean production in India, Asia’s biggest exporter of soybean meal, may climb 12 percent next year after farmers planted more acres with the oilseed after the main growing areas escaped a drought, a trader said.

Output may be as much as 10 million tons in the harvesting season starting Oct. 1, compared with 8.9 million tons this year, said Atul Chaturvedi, president at Adani Enterprises Ltd., the nation’s biggest trader of farm goods.

A bigger soybean crop in India may cut sales of animal feed by processors including U.S.-based Bunge Ltd. and Latin American suppliers to Japan and South Korea, the biggest buyers. Soybean meal prices have declined 16 percent in the past year.

“Prices could come under pressure as supplies increase not just from India, but also from the U.S.,” said Chaturvedi in a telephone interview from Ahmedabad.

Soybean production in the U.S., the world’s largest grower and exporter, will climb to a record 3.245 billion bushels this year, up 9.7 percent from last year, the USDA estimated on Sept. 11. U.S. inventories on Aug. 31 totaled 110 million bushels, the smallest pre-harvest total since 1977, government data shows.

Soybean meal for delivery in December lost as much as 0.8 percent to $276.50 a short ton in after-hours trading in Chicago. That compares with about $360-$365 a long ton for the commodity supplied to Indian ports on the western coast, Chaturvedi said.

“Indian meal is enjoying a premium over the U.S. supplies and one needs to watch how long that will sustain,” he said.

Crop Area

The area sown with soybeans rose to 9.67 million hectares (24 million acres) as of Aug. 31, compared with 9.62 million hectares a year earlier, the Soybean Processors Association of India said Sept. 4. The central Indian state of Madhya Pradesh, the biggest grower, boosted the area under the crop by 3 percent to 5.29 million hectares, the group said.

Rains over central states, including Madhya Pradesh, have been near normal in the June-September monsoon season, bucking dry weather conditions that have caused a drought in almost half the country, according to the weather bureau.

“The worst is over for soybean crop as far as weather is concerned,” Chaturvedi said. “Harvesting has begun in a small way and the yield looks alright.”

Soybean meal, India’s largest meal export, is added to poultry feed as a form of protein to aid birds’ growth. The country usually exports more than 70 percent of its output.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net