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Mustardseed Prices Set For Sharp Rise Due To GOI’s Call To Prevent Blending

28 Sep 2020 10:15 am
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Last week, to ensure the safety in consumption of mustard oil, the Food Safety and Standards Authority of India (FSSAI) has prohibited the amalgamation of other vegetable oils with mustard oil from 1st October 2020. India is leading veg oil consumer country in the world which consumes 23 MMT veg oils annually. About 60% demand is covered mainly from imported veg oils especially palm oil. While domestic supplies is 7-8 MMT every year.

To promote the traditional domestic oils such as Mustard which has second higher acreage under oilseed basket, India has begun to take necessary action from last year in form of banning or limiting the imports of refine palm oil in India. However, FSSAI as on today only banning the blending with mustard oil and kept open window for rest oil but looking at Indian mission to become “AtmaNirbhar Bharat” India may enforce complete ban of blending or admixture in any other premium oil such as Sun & Soy.

Now looking at the present scenario, India produce 7-7.5 MMT mustard seed production annually. India crush almost 93-93% of mustard seed every year which produces 2.50-3.00 MMT. The consumption of mustard oil in India is. 6.5 MMT, this exceed mustard oil production by 3.5M MT. The major blended veg oil is palm oil followed by Rice Bran oil and Soy oil. Palm oil has 2.20-2.30 MMT share as major admixture while rest 1.0-1.50 share contributed by other oils RBO & Soy. To fill the gap of 3.50-3.60 MMT oils in mustard oil, India need to increase the area and yield by at least 10% Y-o-Y from existing area of 6.40 MHA & 1.14 T/H yield and in addition to this India would need 1.50-2.00 MMT canola oil imports to satisfy immediate demand.

The immediate impact of this would be increasing the prices of mustard seed and oil prices due to indirect supply shortage in the market and eventually keeping palm oil prices weak as blending demand will eventually wash out atleast from branded mustard industry.

Although the move has long term repercussion, the NCDEX mustard seed prices will react positively for next few sessions taking prices to above 5500.

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