Soybean - Agriculture commodities

Soybean Trading in India (Agriculture commodities)

Soybeans, also called as Golden beans are one of the largest traded agricultural commodities in world. Major portion of the global and domestic crop is solvent-extracted with hexane to yield soy oil and obtain Soy meal, which is widely used in the animal feed industry. It is estimated that more than 75% of the global Soybean output is crushed worldwide. Very small proportion of the crop is consumed directly by humans in the form of variety of processed foods. In India refined soy oil is the second largest edible oil consumed with a market share of around 15 - 18%. Palm oil consumption by Indian consumer is the most at 46% of the total edible oil consumption. India imports 55-60% of the total edible oil requirement. 

 

What makes Soybean good investment?

Soy bean and its products, being one of the largest traded commodities with high liquidity and volume in India has attracted investor's interest since December 2003, when the national commodity exchanges were launched. Indian soya oil prices have high correlation with the international markets like CBOT soy bean, soy oil and Malaysian Palm which reduces speculative element in this complex. Soybean trading has been attracted by large corporate due to its varied usage in food industry making it very attractive for hedging and arbitrage perspective.

Why is Soybean a wise investment for an Indian trader?

India is the second largest importers for soy oil in the world, and among the top five exporters for soy meal in global markets. This makes Soy oil prices very vulnerable to changes in global demand and supply. Indian exchanges have highly liquid contracts for Soyabean, and Refined Soya Oil in addition to Crude Palm oil and Mustard seed. Soybean complex is one of the largest traded commodities in terms of volume. Active derivatives in this segment have allowed Indian traders to actively do price risk management. It also allows the edible oil importers to hedge in Indian Rupee terms and thus eliminates the currency risk. Future for edible oil and oilseeds in India remains bright as growth in GDP and improved standard of living will keep the annual demand for this complex grow steadily.