The Hindu Business Line : Mustard arrivals begin; Nafed procures at MSP

Ground realities
Mustard/rapeseed prices are ruling below Rs 1,650 a quintal against the MSP of Rs 1,715.
Prices may decline if the Centre clarified edible oil trade's doubts on GMO notification.
Growers could sell to crushers if open market prices improve.

Chennai , April 14

The rapeseed/mustard crop has begun arriving in the markets but growers are selling it only to the National Agricultural Cooperative Marketing Federation (Nafed). This is because Nafed is procuring the crop at the minimum support price (MSP) of Rs 1,715 a quintal as part of its market support operations, while open market price are hovering below MSP.

"Arrivals of rapeseed/mustard crop is good but the crushing industry is unable to lay its hands on it in view of lower open market prices," said industry sources.

Current prices

Currently, rapeseed/mustard is ruling at Rs 1,642.50 a quintal in Hapur, up from Rs 1,595 at the beginning of this month. On the NCDEX, rapseed for delivery in May is being quoted at Rs 341 for 20 kg. On the MCX, mustardseed for May delivery is ruling at Rs 328 for 20 kg.

"The prices have begun to look up only because of the Union Government's notification on import of genetically modified organisms. The situation is a bit unclear with regard to import of edible oils, especially crude soyabean oil and, therefore, all edible oil prices are looking up," they said.

Soyabean oil arrivals

According to the sources, nearly 4-4.5 lakh tonnes of imported soyabean oil are scheduled to arrive in the next 45 days in various ports.

"We expect the Centre to clarify on the issue soon. After that, the price could decline. But as regards rapeseed/mustard, it will be difficult for the solvent extractors to buy unless the prices go above Rs 1,650," the sources said.

Farmers could be willing to sell around Rs 1,650 a quintal directly to solvent extraction units as, according to the sources, they could be assured of immediate payment. "The units pay the money immediately, whereas in the case of Nafed it does take sometime," they said.

NOT A GOOD SIGN

On the other hand, the sources said it was not a good sign for the mustard/rapeseed stocks to head towards Nafed's warehouses.

"The quality of the stocks could be affected," they said.

Asked about prospects of the crop this year, the sources said the crop had been unaffected by unseasonal rains in early March. "The production is likely to be 68-70 lakh tonnes against 65 lakh tonnes last year," they said.

CENTRE'S ESTIMATE

The Centre, however, has estimated the crop at 76.9 lakh tonnes against last year's 83.6 lakh tonnes.

Besides, Nafed is carrying a stock of over 16 lakh tonnes from last year's crop.

Last year, too, Nafed procured mustard as part of market support operation.

It has been unable to sell the stocks in the domestic market or export it as the offers have been not to its expectation.

NAFED'S LOSS

Nafed is expected to take a hit of Rs 1,000 crore on last year's procurement operations. Apart from having to sell the stocks at prices lower than its purchasing rate, Nafed has to foot interest and warehouse rent.

As the arrivals have begun, Nafed has stopped sale of mustard/rapeseed from its stocks at all centres barring the Kolkata terminal market to prevent some elements from buying it at lower price and selling it back to it at higher price. It has also begun to crush the stocks to oil.

According to Mr Alok Ranjan, Nafed's Managing Director, the federation hopes to sell 30,000-40,000 tonnes of mustard/rapeseed up to June in the Kolkata market, while crushing 35,000-40,000 tonnes of the oilseed every month till June.

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