Weekly: Spot Mustard Slips On Weak Demand For Oil/Cake

MUMBAI (Commoditiescontrol) – Spot mustard seed prices slipped for the third consecutive week at the benchmark Jaipur market of Rajasthan weighed by poor sales in mustard oil and mustard cake followed by stock liquidation by Nafed and good pace of rabi crop sowing

Mustard seed dropped this week (Nov 19-24) by 0.70%, or Rs 35 at Rs 4,220-4,225/100kg at the key Jaipur market. Mustard oil (Kachi Ghani) declined 0.36%, or Rs 3 at Rs 834/10kg. Likewise, mustard cake moved down by 0.7% or Rs 15 at Rs 1,975-1,980/100kg.

Rapeseed Ext. (Bulk) (Ex-Kandla)38/2.5 remained steady during the week at $230 per tonne.

Daily mustard seed arrivals in the country this week averaged at 1.25 lakh bags (85kg each), down over 12% from 1.43 lakh bags last week.

The lower supply of mustard seed was attributed to lean season followed by farmers engagement with rabi sowing activity.

Demand in mustard seed is hand to mouth by crushers mainly due to slow enquiries in mustard oil from consumption centres.

Mustard oil prices have turned costlier after sharp losses in palm and soy oil during the last couple of months amid global supply glut.

Further the stockists have avoided large purchases for stock due to uncertain picture, fall in other veg oil prices followed by liquidity crunch.

Demand outlook for mustard cake from domestic consumers were also not encouraging may be due to ample availability of other substitute at competitive rates, but demand is expected to improve ahead as consumption usually increases in the winter season to keep milch animals body warm.

Export of mustard meal in the last couple of months was not encouraging, however shipment so far this FY 2018-19 was robust.

Rapeseed meal exports during September and October month stood at 89,975 tonnes and 25,234 tonnes, respectively. Export during April-October was strong at 6.80 lakh tonnes against 3.23 lakh tonnes in the same period a year ago, according to the Solvent Extractors’ Association of India (SEA).

Agriculture department had not released sowing data for the week, but Rajasthan agriculture department acreage data suggests that mustard seed has been sown in 21 lakh hectares as on Nov 20 versus 18.7 lakh hectares in the same period previous year. Around 81% of sowing completed against the target of 26 lakh tonnes set by the state government.

NCDEX Futures

The most-active December mustard seed futures this week fell 0.8% at 4,095/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX). The contract traded within a range of Rs 4,053-4,142.

The daily average volume for the week slumped by 49% w/w at 17,372 lots (10 tonnes each) and open interest decreased by 12% w/w at 41,632 lots. The fall in volume and open interest along with bearish trend in price suggest weakness to persist ahead.

CONCLUSION
Mustard seed prices in the near term may trade sluggish as stocks in the country are said to be sufficient to cater demand followed by good rabi sowing pace. Demand in mustard oil is likely to be need-based. Any positive move is likely in case of positive news from the front of rapeseed meal export to China followed by hike in incentives on mustard meal exports, which is presently at 5%.

TECHNICAL IDEAS : NCDEX MUSTARD DECEMBER: Band Of Volatility 3920-4262

Support will be at 4057-3972. Resistance will be at 4179-4386.

Sideways Volatility and oscillation around WRV is likely. Higher range to face resistance and can be used to exit long.

Deeper correction is below 3920.



(By Commoditiescontrol Bureau; +91-22-40015533)