Weekly: Mustard Complex Falls On Slow Demand, Weak Futures

MUMBAI (Commoditiescontrol) – Mustard complex edged lower at major markets across the country during the week ended Saturday (April 2-7) in the absence of any major buying from stockists and crushers, weak futures and liquidity crunch.



Mustard seed 42% condition this week dropped by over 1%, or Rs 40 at Rs 3,975/100kg at the benchmark Jaipur market of Rajasthan. Mustard oil eased by 0.51%, or Rs 4 at Rs 776/10kg. Similarly, mustard cake priced 0.53%, or Rs 10 lower at Rs 1,865/100kg.

Although mustard crush parity was mostly positive during the week, but slow offtake in mustard oil and mustard cake prompted crushers to do need-based buying, said an oil miller from Bharatpur.

He said, “Crush parity is positive, but poor demand and liquidity crunch slowed down crush activity.”

We are buying raw material by making instant payment to farmers, but we get compensation for our finished product from our clients quite late and thus circulation of money is tight, which is likely to easy in next few week and may result in good buying in the market, he noted.

Further demand in both mustard oil and mustard cake is not impressive at present, but expecting it to improve ahead as the spread between mustard oil and refined soy oil/RBD palmolein has narrowed significantly, he said.

Mustard oil consumption is expected to improve this marketing year MY 2018-19 (Feb 15-Mar 14). Refined soy oil is now available at Rs 2/10kg premium over mustard oil (kachi ghani) compared with discount of Rs 71 on Jan 1, 2018 and Rs 106 a year ago.

Similarly, mustard oil premium with RBD palmolein is now narrowed at Rs 51/100kg from Rs 166 earlier on Jan 1, 2018.

Mustard oil is considered as more healthier than RBD palmolein and refined soy oil and thus buyers, specially in north- and north-east may consume more mustard oil instead of other edible oils.

Mustard Arrival
Daily mustard arrivals during this week stood at 4.44 lakh bags (approx 85kg each) as against 3.87 lakh bags a week ago, but lower than market expectations as crop is estimated more than last year.

Mustard seed selling by farmers to private traders in the spot market is slow as they prefer it to sell to government agencies at minimum support price (MSP) of Rs 4,000/100kg.

Government agencies at present are buying mustard seed in Rajasthan and Haryana, while procurement in Madhya Pradesh is likely to commence from Tuesday, April 10, 2018.

The total procurement of mustard seed as on April 5 reached at 39,763 metric tonnes (MT), including 6,938 MT in Rajasthan and 32,825 MT in Haryana.

Mustard arrivals in the country so far this season stood at 1,665,5000 bags (14.16 lakh tonnes) from total estimated production of 70.50 lakh tonnes (COIIT/MOPA).

Mustard Futures
Mustard April contract declined 1.47%, or Rs 59 at Rs 3,952/100kg this week on the National Commodity Derivatives Exchange Ltd (NCDEX). The contract during the week hovered between Rs 3,960 to Rs 4,100.



Conclusion
Some more correction of 2-4% in mustard seed can’t be ruled out as demand is slow, but thin arrivals along with procurement by government agencies may result in good demand at the lower level from stockists, traders and crushers.

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