A price-signalling war is on between the government and processors of soybean, as the two have put out conflicting production estimates of the key cash crop that’s an affordable source of edible oil.
According to the Union agriculture ministry’s second advance estimates, there has been a record production of soybean in the country at 15.1 million tonnes during the kharif marketing season 2024-25. However, the industry pegs it at just 12.6 million tonnes.
Currently, the price of soybean oil in the wholesale market hovers at ₹129 -132 per kg.
“The trade feels that the data released by the central government is too high, as area has fallen by seven lakh hectares. Ideally, the difference between the government data and the industry data varies by 5-10%, but this time it is too high.
The industry feels that the total production would be around 12.6 million tonnes. So, considering the production number, we don’t see softening of prices [of soybean oil] in the near future.” said B.V. Mehta, executive director, The Solvent Extractors’ Association of India (SEA).
Industry’s supply concerns
According to him, during the kharif season 2024-25, soybean was sown over 11.83 million hectares, compared to 12.54 million hectares in 2023. However, the industry saw an increase in production in 2024 at 12.58 million tonnes, mainly on account of high yield. In India, Madhya Pradesh is the largest soybean producer in the country, followed by Maharashtra and Rajasthan.
Sanjay Shrishrimal, executive committee member, The Soybean Processors Association of India (Sopa), said that soybean oil prices are unlikely to soften, as the crop output has been muted and also as the industry is grappling with soybean meal disposal, a by-product of soybean oil extraction that is used in food and animal feeds, especially in the poultry sector, principally as a protein supplement.
Import duty, price outlook
Experts feels that soybean oil prices are expected to remain elevated. “According to the second advance estimates, domestic soybean production in the 2024-25 marketing year (October 2024–September 2025) is projected to increase by 16%, reaching a record high of 15 million metric tonnes (MMT). Higher production is expected to boost soybean crushing, leading to a 15% rise in oil production, estimated at 2.9 MMT,” said Pushan Sharma, director – research, Crisil Intelligence.
“Despite higher domestic production and an increase in soy oil imports to 3.7 MMT in 2024-25 (up from 3.37 MMT in 2023-24), oil prices are expected to remain elevated. This is due to the rise in import duties on both crude and refined edible oils. Oil prices are projected to increase by around 30% in oil year 2024-25 (November 2024–October 2025), reaching ₹1,28,000–1,28,500 per metric ton, compared to ₹98,947 in 2023-24,” said Sharma.
The basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil has been raised from 0% to 20%. Meanwhile, the basic customs duty on refined palm oil, refined sunflower oil, and refined soybean oil has increased from 12.5% to 32.5%, making the effective duty on refined oils at 35.75%.
India imports about 60% of its total annual edible oil requirements of 26 million tonnes. In such a situation, experts feel that to achieve the ambitious target of self-sufficiency in the production of edible oils, there is a need to boost production of major oilseed crops like soybean in the country.
To motivate farmers, the central government has increased the minimum support price for soybean for the marketing season 2024-25 to ₹4,892 per quintal from ₹4,600 per quintal in the previous season.
