The Hindu Business Line : Rapeseed mustard futures may see downtrend

Under control
To increase the acreage under RM seed in the rabi season, the Government hiked the minimum support price by Rs 85 to Rs 1,800 per quintal.
However, it had little impact as farmers found cultivation of wheat and chana more lucrative.

Suresh P. Iyengar

Mumbai, Dec. 16 Rapeseed mustard seed (RM seed) futures on National Commodity and Derivatives Exchange (NCDEX) may continue their downtrend tracking the weak soya oil market and huge inventory at the designated warehouses.

After testing a historic high of Rs 500 per 20 kg on November 14, the January contract for RM seed futures fell to Rs 469 on Friday.

Positive Sign

For 2006-07, the Central Organisation for Oil Industry and Trade has forecast RM seed output at 60.2-lakh tonnes against 67.7-lakh tonnes. Though it is a positive sign for RM seed futures, sentiments have turned weak due to high warehouse stock.

To increase the acreage under RM seed in the rabi season, the Government hiked the MSP (minimum support price) by Rs 85 to Rs 1,800 per quintal. However, it had little impact as farmers found cultivation of wheat and chana more lucrative.

According to Weather Watch Report released by the Union Agriculture Ministry, as on November 29, 52.76-lakh hectares have been brought under mustard cultivation, down from 61.31-lakh hectares planted during the same period last year. Late October, the MSP for wheat and chana were hiked by 18 per cent and 11 per cent. The procurement price for wheat was raised to Rs 1,000 per quintal and for chana to Rs 1,600 per quintal.

Expectations of new arrivals from rabi crop in January may turn chana prices weak in the medium to short term. “Arrivals in the Southern states will begin from January, while in the North it is expected from March,” said Mr Sushil Sinha, Regional Head, Karvy Research.

According to Agriculture Ministry estimates, the area under chana cultivation in the rabi season was at 6.6 million hectares, almost the same as last year. Demand for most of the pulses have declined post-festive and marriage season. High arrivals coupled with imports have supported a bearish sentiment. The Government agencies have imported more than 7-lakh tonnes of pulses in the current year and another 2-3-lakh tonnes are expected to arrive in next 1-2 months.

Weak Demand

“Arrivals at the Delhi spot market were about 30-50 trucks even during the lean season. Traders and stockists offloaded their old stocks as they saw no revival in demand in the near future,” said Mr Sinha. Prices have touched almost two-year low of Rs 1,800- Rs 1,900 per quintal in Andhra Pradesh.

“Though the long-term price trend depends on the rabi output, the weak demand and huge quantity of imported pulses should keep prices under control. Spot prices that are ruling around Rs 2,180 per quintal, may come down to Rs 2,050-2,100 levels in next few weeks,” he said.

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