Weekly: Spot Mustard Seed Declines On Lacklustre Demand

MUMBAI (Commodities control) – Mustard seed prices in the spot market declined during the week, ended on April 14, on account of sluggish demand from mills.

MUSTARD SEED:

Mustard seed prices during the week closed down by Rs 15 at Rs 3,960/100kg at the benchmark Jaipur market. During the week, mustard arrivals hovered between 1.50 lakh bags to 5.25 lakh bags (85 kg each) against 4.65 to 5 lakh bags, a week ago.



Notably, during the start of the week we have seen good demand from millers as they were procuring mustard seed in bulk quantities to add stock to their inventory. However mustard prices declined towards the end of the week as millers stopped purchasing mustard seed in bulk quantities.

Crushers are not in rush to procure mustard seed due to ample availability and expectation of some more correction in prices.

The participation of stockists this season are low as they don’t find it much attractive, while they are also facing liquidity crunch as they have incurred losses in many commodities in last few years due to fall in prices, said traders.

Mustard seed is getting support due to procuremet of the commodity by government agencies in Rajasthan, Haryana Madhya Pradesh & Uttar Pradesh.

As on 2nd April Nafed has procured around 19,248 tonnes of mustard seed in Rajasthan & Haryana.

Higher price of mustard seed has reduced the positive crush margin of millers until the by-product price such as mustard oil and mustard cake appreciate substantially.

Due to rise in mustard seed prices mustard crush parity has turned into disparity of Rs 100/tonne agaisnt parity of Rs 90/tonne last week so rise in mustard price is likely limited in coming days as millers will be reluctant to procure mustard seed in bulk quantities when crush margin is negative.

In near term mustard seed prices are likely to trade with bearish bias due to rising supply of new mustard crop coupled with weak demand from millers.

However weakness in mustard seed price can be used as buying opportunity from long term perspective as crushing of mustard seed will increase due to lower price gap between mustard oil and RBD palmolein.

On 1st March, Indian government increased import duty on RBD palmolein by 14% to 54% as result of which premium of Mustard kachhi ghani oil to RBD palmolein has declined to Rs 49/10kg from Rs 128/10kg on 28th February.

Due to lower price gap between mustard oil and RBD palmolein, blending of mustard oil with RBD palmolein will reduce drastically which will boost demand for mustard seed from millers throughout the season.

The Central Organisation for Oil Industry and Trade (COOIT) has pegged India's mustard output for 2017-18 at 70.5 lakh tonnes.

Oil Content in new mustard crop is reported 1.5% up, compared to previous year.

With expectation of higher production for the marketing season 2018-19 mustard seed crush is expected to increase year on year by 4.39% to 67 lakh tonnes.

MUSTARD OIL :

Mustard oil price during the week at the benchmark Jaipur market ruled steady at Rs 769/10kg on limited demand.

Further there is strong rumor in the market that Indian goverenment may increase the import duty on canola oil as mustard seed loose prices are trading below the MSP of Rs 4,000/100kg at most of the market yards of the country.

Traders are also concerned about the price advantage of mustard oil to soy oil.

As of now, the premium of mustard oil over soy oil is of Rs 9/kg which is supportive for mustard oil and when this premium widens to Rs 12-15/kg then consumers may shift to soy oil which will weigh on mustard oil prices.

Mustard Oil Cake:

Mustard oil cake price gained by Rs 10 during the week to trade at Rs 1,870/100kg amid improved demand from cattle feed manufacturers at lower price level.

Outlook: In short term mustard seed prices are likely to trade with bearish bias on rising new crop supply coupled with limited demand from millers.