With speculators liquidating positions in line with the subdued physical market trend, mustard seed prices were down by Rs 17 to Rs 3,789 per quintal in futures trade on May 4. In the National Commodity and Derivatives Exchange (NCDEX), mustard seed delivery for the immediate May contract weakened by Rs 17 (0.45 per cent) to Rs 3,789 per quintal with an open interest of 68,500 lots. Similarly, the delivery of the June contracts eased by Rs 13 (0.34 per cent) to Rs 3,835 per quintal with an open interest of 76,810 lots.
Market analysts attributed the fall in mustard seed futures prices to traders opting for offloading holdings. And traders did that tracking weak leads in the spot markets.
Significantly, just a couple of days earlier, mustard seed prices had been up by Rs 36 to Rs 3,824 per quintal in futures trade, riding on broadening of exposures by speculators, which had been in tune with higher demand at the physical markets. Analysts had attributed the upsurge in mustard seed futures prices to rising demand for oil mills amid restricted arrivals from growing belts in spot markets.
“RM seed NCDEX May futures traded higher due to short covering and also rise in demand from traders, especially oil crushers in the spot market. Fall in arrivals in the physical markets of Rajasthan supported the prices as well. Supplies of mustard in Rajasthan were pegged at 160,000 bags on May 3 compared with 170,000 bags on May 2. Looking forward, increase in pace of procurement from Nafed in key growing states is likely to support prices,” said Geojit Financial Services’ commodity research report.
In 2017, mustard futures had touched its lowest at Rs 3,461 per quintal on the NCDEX in June, thanks to higher production during 2016-17. But prices recovered steadily during the second half by about 20.8 per cent to Rs 4,182 per quintal due to improved meal exports and hike in edible oil import taxes.
India exported 3.76 lakh tonnes of rape meal during eight months of mustard year (MY) 2017-18, up 116 per cent compared with export volumes of 1.74 lakh tonnes for same period last year. Mustard futures in the NCDEX had surged about 7 per cent during second half of November, when the government hiked import duty on edible oils, but since then prices have corrected to almost same levels on reports of good sowing progress, higher carry stocks and stable physical demand for crushing.
Going by the central organisation for oil industry and trade and the mustard oil producers association, India produced nearly 69 lakh tonnes of mustard in 2017, up nearly 19 per cent from 58 lakh tonnes in the previous year, thanks mostly to higher acreage, better yields and favourable weather conditions.
Besides, increase in the minimum support prices (MSP) to Rs 3,700 per quintal from Rs 3,350 per quintal also encouraged farmers to grow more mustard last year.
Meanwhile, the national agricultural cooperative marketing federation of India has procured 291,895 tonnes of mustard in Rajasthan and Haryana, as of May 2, under the price support scheme. The agency bought 124,910 tonnes in Rajasthan, 154,904 tonnes in Haryana and 12,081 tonnes in Madhya Pradesh.
On the exports front, an Ahmedabad-based edible
oil company has signed deals to export over 30,000 tonnes of mustard meal to South Korea and Thailand. The central government lowered output forecast for mustard seed to 7.54 million tonnes from 7.92 million tonnes, in its second advance estimate for 2017-18.