Ahead of the Rabi sowing season, country’s mustard oil processors have sought a review of the Government’s decision on the ban on futures trading of oilseeds and edible oils as this is the right time to send farmers the price signal so that they are encouraged to stick to the oilseed crop and do not shift to other alternative crops.

“We have written to market regulator SEBI requesting for re-launch of the contracts in oilseeds as the permission to commodity exchange NCDEX has not been given to start any new contract in either oilseeds or edible oils,” said Babu Lal Data, President of Mustard Oil Producers Association of India (MOPA). The price signal to farmers is very crucial since wheat prices are high and pulses acreage in Kharif season is lower than year-ago, Data told BusinessLine.

Futures trading

The Association has said that 11 months have passed after the ‘surprise’ decision to prohibit futures trading of edible oils and oilseeds, the SEBI should take an appropriate decision in the interest of farmers, consumers and market participants by analysing its impact since October 2021. In the absence of any futures, processors and importers were not able to hedge their price risk in last one year during which global prices witnessed huge volatility.

Citing the price rise in edible oils after the ban, MOPA said that it was more due to dependence on imports and clearly proved that there was no direct linkage with futures trading.

Oilseeds stock

The Association has also said with 85-90 lakh tonnes (lt) of various oilseeds stock available with farmers as of September 1, the stock as on March 31 is seen at 350 lt. It has also kept the Kharif output on higher side despite decline in acreage. In current Kharif season, the country is likely to have an estimated 130 lt of soyabean and 85 lt of groundnut.

According to Government estimates, soyabean production was 129.95 lt from an area of nearly 122 lakh hectares (lh) and groundnut output was 83.75 lt from about 49 lh during Kharif 2021. In the current Kharif season, the soyabean acreage was 120.5 lh as of September 9 against 120.7 lh in year-ago period. Groundnut acreage was 45.35 lh against 48.94 lh

While soyabean and groundnut are two major Kharif oilseed crops, mustard is grown in winter starting from October and harvesting starts around March. The Government estimates show mustard production at record 117.46 lt from an area of nearly 92 lh (area was up 25 per cent) in 2021-22. However, industry sources said the area was 80-81 lh last year and the output was also lower at around 110 lt.

Expanded area

Farmers had expanded the area under mustard in 2021-22 season due to higher prices they received from the crop sown in 2020-21 season. According to Agmarknet portal, average mustard price was ₹6,453/quintal during main arrival period March-May in 2022 in Rajasthan, which produces around 45 per cent of country’s total production in the oilseed, whereas the mandi rate was around ₹8,000/quintal during sowing time of October-November 2021.

“Farmers thought they would receive ₹8,000 and carried away by the prevailing rate. Had there been futures contracts, they could have an idea about the likely prices in March when they harvest the crop,” said an official of a commodity exchange arguing in favour of lifting of the ban.

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