Expectation of improving meal exports to drive mustard prices

The mustard futures are expected to get a boost from the news that China allowed meal imports from India. However, strict quality parameters, export guidelines and registration formalities have dampened exports in the near term. Moreover, reports of good start to the mustard sowing in Rajasthan and Uttar Pradesh also weighed on prices recently.

In October, mustard futures on the NCDEX declined more than 3 per cent from its highs. However, in September the prices gained about 4.8 per cent or Rs 191 rupees per 100 kg to close at Rs 4,181 (against below Rs 4,000 level in Aug) on anticipation of higher minimum support prices and continuous improvement in physical demand from the oil mills.

During the last four months, mustard futures moved in a tight range of Rs 4,000-4,250 amid good stocks with the government agencies, who are offloading into the physical market as prices moved above the procurement price of Rs 4,000.

In the current year, mustard futures were higher by about 10 per cent compared with last year due to higher crushing demand from the oil mills. According to Mustard Oil Producers Association of India (MOPA), during the current year until September, more than 47 lakh tonnes of mustard seeds have crushed, up by 12.8 per cent against last year.

Mustard arrivals have been on the higher side in 2018. Arrivals till September 30 crossed more than 61 lakh tonnes, up by more than 15 lakh tonnes compared with last year. Moreover, mustard output in 2017-18 (Jul-Jun) is seen at 71 lakh tonnes, up from 69 lakh in the previous year, according to a revised estimate by the Central Organization for Oil Industry and Trade (COOIT).

Earlier, mustard futures moved higher by 13.4 per cent during May–July, supported by improving domestic crushing demand on higher meal exports and increase demand for mustard oil in domestic market.

According to Solvent Extractor Association (SEA) latest press release, country exported more than six lakh tonnes of mustard meal, which almost doubled in the first half of 2018-19 marketing year (April-September) compared with last year.

At present, mustard seed futures are trading in a range due to balanced demand and supply situation, but the stocks are set to decline during the next two months, which could support prices.

Going forward, mustard futures may trade mostly in Rs 4,000-4,300 (CMP: Rs 4,084) as mustard meal to China may take at least one-two months. However, improving export demand from Korea and Thailand, lower stocks with the farmers and oil mills and expectation of lower ac ..