On December 23, 2021, the Ministry of Consumer Affairs, Food and Public Distribution, through the Department of Food and Public Distribution, issued the “Soya Meal Stock Control Order, 2021.” Under The notification stock limits on soybean meal are established from December 23, 2021, through June 30, 2022. The move is intended to check the rising domestic prices of soybean meal.
BACKGROUND: As of December 23, 2021, the Indian government includes soybean meal under the Essential
Commodities Act,1 a key ingredient used in manufacturing domestic compound feeds. Despite ample domestic soybean production, the Department of Food and Public Distribution, within the Ministry of Consumer Affairs, Food and Public Distribution, issued the “Soya Meal Stock Control Order, 2021.”The mandate places stock limits for market participants to check rising prices of the commodity. The implementation period lasts from December 23, 2021 through June 30, 2022.
According to the order, stock limits on domestic soybean meal are applicable for all states and union
territories. The order further directs market players on the following:
- For Plants, Millers, and Processors: Maximum stock of 90 days production, as per their daily
input production capacities. Additionally, the storage location should also be declared. - For Trading companies, Traders: Only government registered enterprises are eligible to stock
soymeal, with a maximum stock limit of 160 Metric Tons (MT) with a defined and declared
storage location.
Implications for Stock Limits
According to trade and industry associations, imposing stock limits on soybeans would likely prevent hoarding and ensure product availability for domestic crushers. Soybean processors do not typically stock soymeal, largely due to high price economics, and that the product does not maintain a long storage life within India. With domestic soybean production estimated at 11.9 million metric tons in 2021, it remains unclear how stock limits on soymeal, as opposed to soybeans, will ensure price correction, and maintain availability for compound feed manufacturers.
Imposing stock limits on soymeal may reduce crushing, which in turn would lead to higher soybean availability and potentially keep soybean prices in check. From September-December 2021, domestic soybean prices (ex-Indore market) ranged between $706-$892 per metric ton (MT) (Indian Rupee [INR] 53,000-67,000/MT), against the minimum support price of $526/MT (INR 39,500/MT). In the same period, soymeal prices ranged between $693-$799/MT (INR 52,000-60,000/MT). A bumper crop in Brazil arriving in February 2022 may result in global price moderation.
India’s various poultry industry associations have welcomed the move. Domestic poultry companies have been the most affected by rising animal feed prices, which in August 2021, successfully advocated that the Indian government imports genetically engineered (GE)-origin soymeal to ease feed supply challenges (See: USDA GAIN IN2021-0106 and IN2021-0141). In December 2021, the Indian the government decided against extending the import period for GE-origin soybean meal owing to ample domestic production and pressure from domestic soybean stakeholders.
In a similar move, to reduce food inflation, the Securities and Exchange Board of India barred commodity exchanges from launching new futures contracts for seven commodities, including soybean and its derivatives.
Source : USDA
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