India’s Erratic Monsoon Could Hurt Soybean Crop and Drive Up Edible Oil Imports

India’s monsoon has delivered erratic rainfall across many of the country’s major crop-producing regions. Soybeans, India’s biggest oilseed crop, could especially suffer from the adverse conditions and possibly force the world’s No. 1 vegetable oil importer to seek out additional edible oil supplies.

India’s soybean crop depends on the abundant rains that normally fall during the June through September monsoon. Since June 1, accumulated precipitation in the country’s soybean growing areas is nearly 10% below the 10-year average, according to Gro’s Climate Risk Navigator for Agriculture. 

For Madhya Pradesh and Maharashtra states, which together account for nearly 85% of India’s total soybean production, August was especially dry. Total August rainfall in Madhya Pradesh, the top producing state, was 61% below the historical average for the month. Since June 1, Madhya Pradesh accumulated precipitation is 12% below average, as shown in this Gro Navigator display, which is weighted to the state’s soybean producing areas. 

Maharashtra’s soybean areas also saw below average rainfall in August, though that followed heavy rains in July, as seen in this Gro display of month-by-month India precipitation anomalies. Total rainfall in Maharashtra so far this season is close to normal levels, as seen in this Gro Navigator display.

India’s key soybean producing states saw similar, below-average levels of rainfall in 2017. The country’s soybean production fell by 24% that year, while crop yields declined by 18%. Despite the production shortfall, imports of soybean oil and palm oil declined that year, while sunflower oil imports rose.  

India typically imports 3 million to 4 million tonnes of soybean oil annually, mainly from Argentina and Brazil. However, continued drought in Argentina, the world’s top soybean oil exporter, sharply reduced soybean production last season.

Importers could turn to palm oil or other edible oils to make up for the likely decline in soybean oil supplies. However, palm oil futures prices are already beginning to rise in part due to an expected increase in demand from India. In addition, a strengthening El Niño climate event is expected to lead to lower palm oil yields in top producers Indonesia and Malaysia in 2024, as Gro wrote about here.