Mustard seed prices have been recovering since late June. The Rapeseed -Mustard seed futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) made a low of ₹3,471 per quintal on June 22 and has reversed higher from there. Though this recovery move is at a slow pace, but it has given a relief to the contract which has been in a strong down-trend since December 2016. The contract is currently trading at ₹3,695 per quintal.

Outlook

The NCDEX-Mustard seed contract has been in a strong downtrend ever since it made a high of ₹4,860 in November 2016. However,this downtrend halted at a low of ₹3,461 in early June this year. After a brief sideways consolidation for about a month, the contract has been moving higher from end of June.

This relief rally is facing resistance in the ₹3,700-₹3,720 region over the last few trading days. The 21-week moving average is poised near ₹3,700 and a trend-line resistance is poised at around ₹3,720, the contract continues to hover below this resistance zone. Inability to break above ₹3,720 can pull the contract lower to ₹3,650. Cluster of supports are poised at around ₹3,650 and a fall below ₹3,650 is less probable. If the contract manages to sustain above ₹3,650, a range bound move between ₹3,650 and ₹3,720 is possible for some time. But a fall below ₹3.650 can drag the contract lower ₹3,600 in the short term.

The contract will need to break above ₹3,720 decisively to resume the current upmove. Such a break can take the NCDEX-Mustard seed futures contract higher to ₹3,750 – the 50 per cent Fibonacci retracement resistance initially. Further break above this resistance will see the upmove extending to ₹3,820 or ₹3,840 over the medium term.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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