Mustard falls on improved sowing

Mustard, the main rabi oilseed crop, is witnessing a steady fall after touching a record high in October. Prices have declined by more than 10.5 per cent due to late monsoon showers in mustard growing States, thereby increasing chances of normal sowing. Further, a decision by the Rajasthan government to impose stock limits on oilseeds also pressurised the prices.

In the September-October period, prices had firmed up substantially on production concerns due to below-normal rains.

According to the Fourth Advance Estimate, in 2014-15, mustard production was pegged at 63.1 lakh tonnes (lt), a drop of 20 per cent from 78.8 lt produced in 2013-14.

Currently, favourable weather conditions in the main mustard growing States have encouraged farmers to speed up sowing in the last one month.

Even though prices are at record highs, the sowing has been delayed by more than a fortnight due to high temperature and lack of soil moisture.

Sowing progress was almost 50 per cent less in mid-November than the area sown last year but it has now picked up.

As on December 4, planting had taken place on 54.17 lakh hectares (lh), down only 11 per cent from the same time last year (60.91 lh).

Rajasthan, the top producer, recorded 23.61 lh compared to 25.76 lh last year till December 10, according to the State Agriculture Department. Similarly, Uttar Pradesh and Madhya Pradesh have sown 1.34 lh and 0.73 lh less in the current year from last year.

Exports of mustard meal hit a low of 2.95 lt in the first eight months of the current financial year against 7.66 lt logged in the same period last year. Thus, meal exports in FY 2015-16 were down 61 per cent due to higher prices and lack of Chinese demand.

India exported the meal to South-East Asian countries such as South Korea, Taiwan, Thailand and Indonesia.

The worldwide mustard seed output is going to fall for the third consecutive year to 66.2 million tonnes (mt) in 2015-16 compared to 71.9 mt in 2014/15, according to the USDA December report, led by a sharp decline in production in the European Union (EU), China and India.

The lower supplies of mustard seed due to last year’s poor harvest resulted in higher prices but imports of mustard oil and discouraging meal export data are pressurising prices.

Under normal conditions, the prices may be range-bound between ₹4,300 and ₹4,600 a quintal. However, they may surge to above ₹4,800 (CMP: ₹4,585) if there is any upward shock due to unfavourable weather.

The writer is Head – Commodities & Currencies Business Equity Research & Advisory, Angel Broking. Views are personal.