High demand, low stocks to keep Mustard prices firm

Mustard meal expo­rts went up by 200 per cent in financial year 2017-18. Higher meal exports and lesser carryover stocks due to increased crushing will keep mustard seed prices firm in the coming months.

Export of mustard meal in FY18 were up by over 200 per cent to around 664,000 ton­n­es. Shipments had gone up to key markets like South Korea, Bangladesh, Thailand and Vi­etnam that account for over 90 per cent of the total export volumes. Among these markets, S Korean exports went up by 30 per cent to 220,000 tonnes, exports to Bangladesh increased by 58.3 per cent to 118,000 tonnes, Thailand by 480 per cent to 117,000 ton­n­es and Vietnam by 208 per cent to 97,400 tonnes.

“This year soy meal prices went up by 30 per cent. Hen­ce the key markets used mustard seed as an alternative to soymeal and imported more. Soymeal and mustard meal are largely used as animal feed,” said Ritesh Kumar Sa­hu, fundamental analyst, agri commodities, Angel Broking.

Export of soymeal has been influencing the mustard seed prices since the beginning of the year. Mustard seed was trading around Rs 4,200 per quintal in the futures market in the beginning of the year. By mid-January, prices cooled to Rs 3,795 per quintal as reports about a bigger crop started coming in.

For FY18, mustard prod­u­ct­ion was estimated to be aro­u­nd 7.05 million tonnes agai­nst 6.95 million tonnes in the previous year. The country had achieved higher production despite a 5 per cent lower acreage. The weat­her conditions were favourable for the rabi crop this time.

But prices bounced back to Rs 4,100-4,200 per quintal during February and March. The export demand for meal came to rescue of prices. In March itself, India exported 125,000 tonnes of mustard meal. The carryover stocks too were depleting in the market due to increased crushing.

But by March once again prices fell to Rs 3,750 per qui­ntal when the new crop started arriving in the market. In the first three months, the arrivals crossed 3.5 million ton­nes, almost 1 million tonnes more than last year. After a brief period, mustard seed pr­ices recovered and are currently trading above the minimum support price of Rs 4,000 per quintal.

Export demand will continue to support prices in the coming months. Further, the production of next year can be lower as the monsoon predict­ion need not favour rabi crops in the northern and western parts of the country. 

“Though Indian meterological department (IMD) has predicted a normal monsoon this year, chances of a dry spell in parts of northern and western India after August has not been rul­ed out. The rain during this period is crucial for retaining moisture in the soil during the rabi season. Mustard is a rabi crop and hence a dry spell in August can bring down production next year,” said Sahu.

Moreover, the carryover st­ocks also would be lesser by November-December as the crushing has been on the higher side this year. Acco­rd­ing to data compiled by the Mustard Oil Producers Assoc­iation of India, oil mills across the country crushed about 2.6 million tonnes of the mustard during the first three months of new season – March, April and May – up by 31.6 per cent compared with the same period last year.

“Lower production, incre­ased export demand and lesser carryover stocks will keep mustard seed prices firm for the coming months. By Jan­u­ary-February prices can move up to Rs 4,500 per quintal,” said Sahu.


Sangeetha G.