India’s Soybean Production to Drop Amid Erratic Monsoons and Crop Shifts: USDA Report

India’s soybean production for marketing year (MY) 2026-27 is expected to decline significantly, driven by unpredictable monsoon rainfall and a noticeable shift by farmers toward more lucrative alternative crops. According to a report released by the USDA’s Foreign Agricultural Service (FAS) in New Delhi, India’s soybean harvested area has been revised down to 10.5 million hectares, pushing projected total production down 8 percent from earlier estimates to 9.6 million metric tons (MMT).

The report highlights that initial planting efforts faced severe setbacks due to an El Niño-influenced delayed monsoon onset, particularly across key growing areas in Maharashtra. Unseasonal and irregular rains during July and August further hampered crop development, lowering pod formation and expected oil yields. Frustrated by climate uncertainty, many farmers diverted land to cotton and corn. Expanded corn acreage was largely incentivized by higher market returns and government support linked to ambitious national ethanol blending targets.  

This downturn in domestic soybean cultivation is sending ripple effects across the country’s agricultural and food processing sectors. Local soybean crush volumes are forecast to fall 6 percent to 8.7 MMT, curbing domestic soybean oil output to 1.6 MMT. To cover the resulting edible oil shortfall, India is set to rely heavily on foreign imports. While global price swings have impacted palm oil purchases, refiners and consumers are increasingly turning to sunflower oil, with imports projected to jump 41 percent to 3.1 MMT. Meanwhile, India continues to import discounted soybean oil from South America, alongside non-GMO raw soybeans duty-free from African Least Developed Countries (LDCs) like Benin, Niger, and Togo to maintain processing operations. 

Concurrently, the tight domestic oilseed supply has triggered a sharp surge in feed expenses. Driven by reduced crushing activity and strong local demand, soymeal prices spiked, pushing feed costs up by more than 45 percent. In response, poultry producers cut output by approximately 20 percent to manage soaring operational expenses. Higher prices and limited inventories have also crippled India’s soybean meal export competitiveness, causing outbound shipments to drop to a four-year low as global buyers pivot to South American suppliers.  

Despite a 7 percent government hike in the Minimum Support Price (MSP) for soybeans, local market prices during July and August surged to between $72 and $80 per quintal, well above support levels. Strong market pricing prompted farmers to liquidate older carryover stocks, driving domestic ending stocks down to a multi-year low of 300,000 MT.