India’s Soybean Crop Squeezed by Drought as Madhya Pradesh Surges

India’s 2026 soybean crop is set to fall about 2.1% year-on-year despite a larger sown area, as drought and moisture stress in key southern and western states outweigh strong gains in Madhya Pradesh and Rajasthan. This tighter national balance is already underpinning robust domestic prices in many mandis and should keep internal values supported into the post-harvest period. India’s soybean acreage has expanded and yields have improved in some core regions, but prolonged dry spells have sharply reduced harvested area in Maharashtra, Karnataka and Telangana. Crushers and feed users face a more finely balanced supply situation for 2026/27, with regional price spreads likely to remain wide as buyers compete for high-quality supplies from surplus states.

Prices

Our latest physical indications show a firm to slightly rising tone in origin markets, with India and Ukraine leading recent gains while U.S. export values are comparatively soft:

Within India, spot mandi prices are trading comfortably above the current government minimum support price (MSP), reflecting tightening fundamentals. As of 17–18 October 2026, average APMC soybean rates across major producing states were roughly 15–25% above the MSP of INR 5,708/quintal, with Maharashtra, Karnataka, Telangana and Madhya Pradesh all reporting strong cash levels on the back of local crop losses and active processor buying.

Supply & Demand

India’s 2026 soybean production is projected at 10.79 million tonnes, down from 11.03 million tonnes in 2025, a year-on-year decline of about 2.1%. Total planted area nevertheless rose nearly 5% to 11.77 million hectares compared with 11.21 million hectares last year, underscoring how weather, rather than acreage, has been the dominant driver of output this season.

About 776,000 hectares of soybean area have been affected by drought and inadequate soil moisture nationally, trimming the effective harvested area to around 11 million hectares. The heaviest damage is concentrated in Maharashtra, Karnataka and Telangana, where an estimated 702,000 hectares were completely lost and left unharvested, significantly tightening local supplies despite the national crop only falling modestly.

Production trends are sharply divergent across states. Madhya Pradesh, the country’s largest soybean producer, is expected to see output jump 32.2% to 5.72 million tonnes from 4.32 million tonnes, supported by area expansion from 4.86 to 5.21 million hectares and higher projected productivity of 1.11 tonnes per hectare versus 0.89 tonnes last year. Rajasthan is also forecast to post a strong 48.2% increase, with production seen at 947,000 tonnes on improved yields and acreage.

By contrast, Maharashtra’s soybean output is projected to drop by 33.2% to about 3.49 million tonnes as prolonged dry weather and moisture stress hit crops during critical pod-setting and filling stages. This aligns with the broader monsoon pattern in 2026, where Maharashtra entered the withdrawal phase with a rainfall deficit of around 17% and some districts recording much larger shortfalls, providing a clear meteorological backdrop for the observed yield losses.

India’s national average soybean yield is estimated at roughly 0.98 tonnes per hectare, broadly unchanged from the previous season. This headline stability masks the underlying variability: yield gains in Madhya Pradesh and Rajasthan are largely offset by sharp drops in parts of Maharashtra, Karnataka and Telangana.

Fundamentals & Demand

The modest national production decline, combined with regional crop failures, is likely to constrain domestic availability for crushers and processors. Soybean is a key input for both edible oil and protein-rich meal used by India’s poultry, dairy and aquaculture sectors, so even a small national shortfall can tighten the balance when concentrated in deficit states.

Higher production in Madhya Pradesh and Rajasthan should help limit the overall supply deficit and stabilize all-India availability, but the logistics of moving beans from surplus central and northern regions into drought-affected western and southern markets will remain a key driver of regional basis levels and crush margins. In practice, this is already evident in mandi prices, which show particularly strong premia in states where local crops have suffered the greatest damage.

For crushers, the combination of steady national yields, slightly lower output and robust domestic demand for vegetable oil and feed implies a relatively tight but manageable raw material environment. Processors may rely more heavily on beans sourced from Madhya Pradesh and Rajasthan, while some consumers—especially in livestock and poultry—could face firmer meal prices if crush rates lag or if margins are squeezed by elevated bean procurement costs.

Weather & Crop Condition Outlook

The 2026 southwest monsoon withdrawal began over Maharashtra in early October against the backdrop of a significant seasonal rainfall deficit for the state and for large parts of peninsular India. With the kharif soybean crop now largely at or past harvest, short-term rainfall forecasts play a smaller role for yield but remain important for late harvesting, post-harvest drying and soil moisture recharge ahead of rabi sowing.

Seasonal outlooks for the post-monsoon period point to a relatively mixed pattern, with no immediate signal of heavy recovery rains in the drought-affected belts. This suggests that moisture stress impacts seen in 2026 are unlikely to be reversed in the very short term, reinforcing the current production estimates and limiting the scope for significant upward revisions.

Short-Term Market & Trading Outlook

Key drivers for the next 2–4 weeks:

• Confirmation of final harvested area and realized yields in Maharashtra, Karnataka and Telangana, where reported crop losses are highest.
• Crush demand from domestic edible oil and meal users as they respond to tighter local bean availability and elevated mandi prices.
• Relative competitiveness of imported soybeans and alternative oilseeds versus domestic supplies, given current global price levels.

Trading recommendations

• Indian crushers and feed users: Consider front-loading a portion of procurement from Madhya Pradesh and Rajasthan while harvest pressure still offers liquidity, as drought-hit western and southern markets are likely to retain a structural premium over the coming weeks.
• Exporters from India: With FOB New Delhi soybeans at 0.89 EUR and domestic mandi prices well above MSP, focus on higher-value or niche shipments rather than volume plays, as internal demand should remain strong and constrain export availability.
• Buyers in Asia and the Middle East: Monitor Ukrainian and U.S. offers closely—currently at 0.333 EUR FOB Odesa and 0.58 EUR FOB Washington D.C.—as alternative origins to hedge against potential tightening in Indian-origin supplies.

3-day directional outlook (physical, EUR-based)

• India FOB New Delhi (sortex clean): Stable to slightly firmer as processors compete for high-quality beans in a drought-affected crop year.
• U.S. FOB Washington D.C. (No. 2): Mostly steady, with external direction coming more from global futures and currency moves than from Indian fundamentals in the very short term.
• Ukraine FOB/CPT Odesa: Mildly supportive bias after recent incremental price increases, with logistics and Black Sea risk premiums remaining key watchpoints.