MUMBAI (Commoditiescontrol) - Stockists are likely to be optimistic in mustard this year as production is projected to decline from the previous estimation and last year’s crop. They are likely to enter the markets when the prices touch Rs. 3,550-3,600/100kg as they consider this a logical level, said Mr. Shyam Sundar Agrawal from Ashoka Oil Industries based in Jaipur. Mustard seed is currently trading at 3,750/100kg at the Jaipur market.
Mr. Agrawal told commoditiescontrol.com that mustard production this year was earlier estimated at 61-62 lakh tonnes. However, now crop is likely to be affected after the recent rains and production is estimated to fall as low as 58-59 lakh tonnes.
As on March 1, 2015, there was opening stock of 1,00,000 tonnes of mustard. Oil mills may require last year’s mustard till the end of this month, but there’s insufficient stock left.
On the other hand, new supply is picking-up pace on a daily basis. At present, mustard arrival is likely at 2.5 lakh bags daily which may reach 5.6 lakh bags by March 25. Last year, mustard production was estimated at 63 lakh tonnes and carry forward stock was 2.3 lakh tonnes.
This year so far, buyers seem to be purchasing mustard aggressively in the wake of estimated lower crop. Stockists can come forward for buying at the price of Rs. 3,550-3,600/100kg. However, prices may not stay at this price in the long-run. Once stockists start buying, prices will improve.
In another scenario, mustard will be preferred over soya refined if there is price difference of Rs. 3-4/kg between the two, according to Mr. Agrawal. If that happens, oil mills will buy mustard aggressively, which could drive the prices toward Rs. 4,500-5000/100kg.
However, if the price difference between soya refined and mustard oil moves higher than Rs.5-6/kg, mustard will be offered not more than at Rs. 4,000/100kg. If the price differentiation between the two alternatives exceed this level, demand in mustard will decline, Mr. Agrawal feels. He added that if mustard consumption decreases, prices may touch as low as Rs. 3,550-3,600/100kg (42% condition ex-Jaipur).
At present, last year’s mustard is being offered at Rs. 3,850/100kg, while new mustard is being traded at Rs.3,750/100kg.Whereas, mustard oil (kachhi ghani) from outside region is being sold at Rs. 70 per kg which can further come down to Rs. 67 per kg. Although in Jaipur local markets, there is disparity of Rs. 2.72 per kg in mustard oil. Mr. Agrawal observes that it is a sad fact that we as a country failed to succeed in oilseed production despite being one of the largest consumers.
To overcome this such situations, we need to understand consumers’ profile to analyse demand in oils, he said. We need to categories Indian consumers into three segments - price sensitive, traditional and shifting consumers. Small scale industries dominated mustard oil trading. But, tax structure is same for small and large scale industries. The government should provide incentives to small industries for their healthy growth, he noted. It should give tax relief and rebate in power charges. Also, import duty on imported edible oil should be increased to protect domestic industries.
He feels that India needs a new green revolution for oil seed production. Farmers should be given high quality seeds and fertilizers. The government should help with latest technologies in farming. Oil seed productivity varies at around 1,000kg per hectare in our country, while the productivity increases to 2,000-2,200kg per hectare in other countries. This is the main reason why we can become self-dependent when it comes to edible oil. According to him, we have to import 140 lakh tonnes edible oil every year. It can reach up to 280 lakh tonnes during the next 10 years.
Commenting on mustard meal, Mr. Agrawal said that mustard meal export increased in February after decline in January. As per the data released by Solvent Extractors’ Association of India (SEA), mustard meal export was 62,545 tonnes in February compared to previous month, but it was down around 24 per cent from 82,294 tonnes a year ago same period. But on annual basis, mustard meal export has increased.
Indian has exported 10.02 lakh tonnes mustard meal between April 2014 and February 2015 against 8.20 lakh tonnes same period a year ago. Mustard meal export has already increased by over 22 per cent. Mr. Agrawal said that mustard meal prices may come down to Rs. 1,550-1,600/100kg, which is currently being sold at Rs. 1,800/100kg.
For the first time, canola oil is not being imported in our country, he said. During 1977-78, canola seed was brought to India and oil was extracted here. Oil content is around 45% and iodine value is 118-122 grams. While, iodine value is standardized at 112 grams in our country. Now, canola seed is not imported but it’s oil is getting imported.
Mr. Agrawal said that NCDEX should allow trading in mustard seed with oil content of 40 per cent. Normally, 42 per cent oil doesn’t extracted from mustard seed and 39 per cent never. So, there should be 40 per cent oil condition for mustard futures trade.
(By Commoditiescontrol Bureau; +91-22-61391533)
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