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Informist, Wednesday, Dec. 4, 2024

 

By Anjali Lavania

 

MUMBAI – Mustard prices showed a marginal recovery in November, but market sentiment is expected to be bearish in the medium-term due to huge mustard seed sales by government agencies, weak rapeseed meal exports, higher imports of other edible oils and sluggish demand, traders said. Currently, mustard prices are in the range of INR 6,600-6,700 per 100 kg in major spot markets, higher than the minimum support price of INR 5,950 per 100 kg. Mustard prices were in the range of INR 5,850-5,950 per 100 kg a year ago. 

 

The bearish trend is primarily due to the disposal of mustard seed stocks by the government, which will likely prevent significant price spikes in the short-term to medium-term, Indrajit Paul, head of research of Agrocorp International, said. 

 

"Prices are getting down due to many reasons, like availability and huge sales by the National Agricultural Cooperative Marketing Federation of India and The Haryana State Co-operative Supply and Marketing Federation through tenders," Rahul Chauhan, director of IGrain India said. Prices are trending down also as the festive demand is over and due to higher imports of edible oils, Chauhan said. 

 

Mustard is a rabi crop sown from October to early December in north, east and northeast India. The crop matures in 108–147 days and is harvested from mid-February to May.

 

Edible oil imports in October rose 43% on year to 1.42 million tonnes, according to the Solvent Extractors' Association of India data. India is a major producer of mustard and so does not import mustard oil. However, imports of cheaper edible oils reduce the demand for domestically produced mustard oil.

 

The National Agricultural Cooperative Marketing Federation of India has disposed of a lot of mustard seed stocks in open markets, which has increased supply and exerted downward pressure on prices, Paul said. Government agencies have disposed of around 1.3 million tonnes of mustard in the market so far this season, compared with 300,000 tonnes in the same period last year.

 

Agencies like the National Agricultural Cooperative Marketing Federation of India and The Haryana State Co-operative Supply and Marketing Federation still have stocks of 1.45 million tonnes, according to Marudhar Trading Agency. Mustard available with farmers is around 950,000 tonnes and the expected stock at the end of season is 280,000 tonnes, suggesting abundant supply, Marudhar Trading Agency said.

 

Mustard arrivals this season till November-end are around 9.8-9.9 million tonnes, inclusive of farmers' stocks, old stocks, and government stocks, compared with 9.6-9.7 million tonnes in the same period last year, according to Paul.

Moreover, new crop arrivals are expected to reach the markets after Feb. 15, Paul said.

Currently, the mustard price in Jaipur is at INR 6,500 per 100 kg, down 0.8% month-on-month, but sharply lower from the season's peak of INR 7,150 per 100 kg in late September, Paul said. 

 

Mustard prices globally are lower compared to domestic prices and export demand for rapeseed mustard meal has been very poor, Anil Chattar, director of Marudhar Trading Agency, said. Mustard prices internationally declined by 9.5% in the last one month to $417.8 per tonne.

 

The Solvent Extractors' Association of India has urged the government to take steps to improve exports of rapeseed meal. Rapeseed meal exports in Apr-Oct declined by around 25% to 1.18 million tonnes, the association said. "This is largely due to our higher pricing earlier in the international market," the association said, urging the government to provide export incentives of at least 15% for rapeseed meal by way of higher duty remission, freight subsidy, and interest rate subvention to make exports competitive. India exported nearly 2.2 million tonnes of rapeseed meal in 2023-24 (Apr-Mar). 

Indian rapeseed meal prices are high due to elevated domestic costs driven by the minimum support price, which ensures higher returns for farmers but increases costs of processors. Additionally, high production and operational costs, coupled with expensive inland freight and logistical inefficiencies, further inflate export costs, Paul said.

 

Mustard oil prices in Jaipur are hovering around INR 1,355 per 10 kg, down by 1.1% on-month, Paul said. In the near term, the wedding season is expected to keep demand robust temporarily, but going ahead the trend will depend on factors such as import duty, mustard crop output and global edible oil market dynamics, Paul said.

 

While mustard oil remains a staple in northern and eastern states due to its traditional and culinary significance, there is a gradual shift towards other edible oils like palm, soybean, sunflower, and rice bran oils, driven by factors such as affordability, availability, and changing consumer preferences, especially in urban areas.

 

In the long term, however, mustard seed prices are expected to rise, especially since production this year is likely to be lower. In the long-term, mustard prices could trend towards INR 7,300 per 100 kg, especially if they break the resistance level of INR 6,950 per 100 kg, signalling bullish momentum. "The long-term outlook is supported by expectations of lower new crop production, which could tighten supplies and push prices higher," Paul said.

 

Mustard acreage was 7.6 million hectares so far in the rabi season, down 5.2% from a year ago, according to data from the Department of Agriculture and Farmers Welfare released on Monday. Mustard sowing in Rajasthan, the largest mustard-producing state in India, is down 6.5% on year at 3.2 million hectares.

 

Paul expects rabi mustard production to decline 8-10% to 10.4-10.6 million tonnes, primarily due to lower acreage and adverse weather conditions. "This season, temperatures in Rajasthan and other key producing states were 2 to 7 degrees Celsius above normal during October and early November. Due to this, mustard seeds failed to germinate in many places, forcing farmers to abandon the crop or switch to alternatives," Paul said. 

 

"Farmers are shifting to other crops like wheat and potatoes instead of mustard in several parts of India. Despite prices being just above the minimum support price for mustard, factors such as heat-resistant crops and higher profitability from alternatives are influencing this shift," Paul said. 
 

Farmers in Rajasthan have shifted from mustard to wheat and chana because of better remuneration. This trend is also observed in states such as Uttar Pradesh, Madhya Pradesh, Gujarat, and Haryana. "The competitive prices of crops like wheat and chickpeas, which have surged recently, provide additional motivation for farmers to allocate more acreage to these alternatives," Paul said.  End

 

Edited by Saji George Titus

 

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