JAIPUR (Commoditiescontrol) - Mustard seed prices are likely to stay soft even as production is expected to fall this year. Traders said that it will not be a surprise to see mustard seed prices softening Rs 300/100kg in the next few days. The reason being blending of imported edible oils with mustard oil. The trend is being practised unabated in the market. Mustard seed priced at Rs 3,780/100kg (42 percent condition) on Monday which was Rs 30 lower from the previous session.
According to second advance estimate of ministry of agriculture, mustard production was projected at 73.63 lakh tonnes which is lower than 78.77 lakh tonnes produced last year. On the other hand, 57.40 lakh tonnes mustard production was estimated by Mustard Oil Producers Association (MOPA) in a seminar held at Jaipur on March 15, 2015. This includes, estimated production of Taramira of 40,000 tonnes. Many businessmen do not agree with MOPA’s production estimate but they also expect price fall due to blending of imported oils.
According to MOPA, around 65 lakh tonnes mustard was produced last year 2013-14 but this year the output is expected to fall to 57.40 lakh tonnes. The production is estimated at 25.80 lakh tonnes in Rajasthan, 6.5 lakh tonnes in Uttar Pradesh, 7.25 lakh tonnes in Punjab and Haryana, 2.85 lakh tonnes in Gujarat, 4.80 lakh tonnes in Madhya Pradesh, 3 lakh tonnes in West Bengal, and 1.10 lakh tonnes in Bihar and 4.80 lakh tonnes in other states. Commoditiescontrol.com has spoken to various traders to ascertain the effect on prices from the estimated decline in production.
Mr. Babulal Data, President, MOPA emphasized that he does not expect price of mustard seed and oil to rise in the near future. He pointed out that imported oils, specifically canola is being blended around 30-35 per cent, with mustard oil. Canola is available Rs 10-15/kg cheaper than mustard oil. In such a situation, mustard oil prices cannot find support. As regards to mustard cake, its price depends on Chinese demand. China is not buying mustard cake from India. If China’s demand increases, subsequent movement in price can be expected. Mr Data opined that mustard (42 percent condition) can be sold at Rs 3,400/100kg in Jaipur.
MOPA’s general secretary and prominent trader of Sri Ganganagar Jyoti Kanda said that price direction for domestic oil and oilseed will depend on international markets. Mustard is expected to be available till the end of the current year as it’s supply is delayed, so price rise is not expected. Around 10-11 lakh tonnes mustard is expected to be harvested in Sri Ganganagar and Hanumangarh and it’s supply will start in April. According to Kanda, if mustard cake demand increases, plants will become operational and this factor will determine prices of mustard seed and oil, both. If the government raises import duty to protect domestic industry and revise tax rate of VAT, it’s effect will be visible.
Mr Satyendra Kumar Shukla, Associate Vice President (Commercial), Adani Wilmar, Jaipur said that he expects production of not more than 53 lakh in the country. Around 60 per cent mustard arrival will start by the first week of April in major producing states and it’s impact will be seen. Constant increase of import of Canadian canola is affecting domestic market. Imported oils are very cheap, and hence it will not let mustard prices to rise. Canola oil import was 40,000-50,000 tonnes in 2013-14. It increased to two lakh tonnes in the current financial year. Canola oil import is expected to double at 4 lakh tonnes in next financial year 2015-16. Canola cake is supplied to China from Canada as such Indian mustard cake exports are under pressure. In such a condition, Indian mustard cake demand will not increase. Canola cake is imported by several other countries namely Korea, Thailand and Vietnam besides China.
Mr Shyam Bajaj, Director of Jaipur-based Shreekant Oils (P) Ltd said that mustard is expected to touch bottom level of Rs 3,400/100kg as arrival pressure will increase by April end. But prices may improve after that. He said that big players will start buying at bottom level and stockists are also expected to turn active. On oil price front, he said that we are much dependent on imports. Supply of canola oil from Canada has mainly troubled mustard oil industry. The government should increase import duty on edible oils to protect the domestic industry.
(By Commoditiescontrol Bureau; +91-22-61391533)
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