Mustard prices are on the boil, tracking the soyabean trend early in the rabi marketing season and cheering the growers. Stakeholders attribute the record prices for mustard to rising edible oil demand, global price trends, speculation on the commodity exchanges and lower arrivals in the markets.
Arrivals are sluggish and lower than same period a year ago, as farmers are busy harvesting crops such as wheat and barley. They are also watching the uptrend in mustard prices and holding back their produce expecting prices to rise further.
Modal prices of mustard in the largest producer State,Rajasthan, that hovered at ₹5,000-5,300 per quintal in various mandis in early March have now surged to record ₹6,480-6,700 levels. Stakeholders say the prices could go up further as it is still early part of the harvest season. The minimum support price for mustard for the 2020-21 marketing season is ₹4,650.
Higher production seen
Mustard production according to the 2nd Advance estimates of the Agriculture Ministry is seen at 10.43 million tonnes (mt) over last year’s 9.12 mt, an increase of 14 per cent. The trade estimates the crop to be between 8.5 mt and 9 mt, higher than the last year’s 7.5 mt.
Vijay Data, Managing Director, Vijay Solvex Ltd, a mustard oil processor in Alwar, Rajasthan, said the current flare-up in prices is driven by the global trend in edible oils. While palm and soya oil prices have almost doubled over the past year globally, domestic edible oil prices, which follow the global trend, are up 60-70 per cent. Besides the increase in global prices, the slowdown in imports is also influencing the price trend.
“Arrivals are not even half of the peak levels. Farmers have seen the prices. Crop has been harvested in March and we are in late April. The next crop will be at least 10 months away. When farmers know that prices are hovering around ₹7,000 in April, there is every possibility that it may go up further,” he said.
“One was not expecting that the price will touch the sky in this manner, when the new crop has arrived,” said Vivek Puri, promoter, P Mark mustard oil brand. Apart from the surge in demand, the speculation on the commodity exchange has also contributed to the rise in mustard prices, Puri said.
The Solvent Extractors Association and Soyabean Oil Processors Association have already flagged the issue of speculators driving the soyabean prices.
Mustardseed contract for May 20 delivery on NCDEX was 3.64 per cent higher at ₹7,354 on Thursday with an open interest of 73,780, while the spot price was ₹7,500. Soyabean contract for May 20 delivery was 1.25 per cent higher at ₹7,527 with an open interest of 92,040 and spot soyabean was quoted at ₹7,812.
According to the edible oil processors, mustard prices are hovering around ₹7,200-7,400 in various markets.
“Mustard seed supplies are stressed as the arrivals are thin,” Puri said expressing fear that the processing units may not run at their capacities. “Even now, the processing has been impacted,” Puri said. Considering the uptrend in prices, farmers, traders and stockists are holding the produce.
Puri further said that with various other feed options available for dairy farmers, the demand for mustard oil cake has taken a hit, hurting the processors.
BV Mehta, Executive Director, SEA, said the pressure on mustard was driving the prices. While the crop is good, mustard is still being harvested and brought into the markets. “We may see a cool down in prices in the second half of the year,” Mehta said.
Lakshmi Chand Aggarwal, President, COOIT, said the trade is affected, while farmer is getting a record price of around ₹7,200 per quintal. Such a high price trend may affect the functioning of the smaller processing units during the off-season and COOIT has recently urged Nafed to procure at market prices and supply during the off-season.