MUMBAI (Commoditiescontrol) – Mustard seed prices declined further this week (Dec 3-8) in the spot markets due to subdued business activity amid slow sales in mustard oil followed by good pace of rabi sowing. The market participants are also facing liquidity crunch and that is the main factor has hurt business activity. Cues from futures too were not encouraging with prices settled this week a tad down.
Mustard seed 42% condition dropped this week by 0.7%, or Rs 30 at Rs 4,175/100kg at the benchmark Jaipur market of Rajasthan. Similarly, mustard oil Kachi Ghani went down by 0.7%, or Rs 6 at Rs 818/10kg. The fall was steep in mustard cake with prices plunged over 3% at Rs 1,870/100kg.
Daily mustard arrivals this week averaged at 1.14 lakh bags, down from 1.26 lakh bags a week ago.
The export of rapeseed meal during April-November is sharply increased to 745,901 (392,463) tons in first eight months, almost doubled mainly exported to South Korea, Vietnam and Thailand, said B.V Mehta, Executive Director, SEA.
Mehta said, “We understand from Ministry of Commerce/Export Inspection Council of India that China will resume import of Rapeseed Meal from India. Those five units already approved by General Administration of Customs of the People’s Republic of China, GACC (formerly AQSIQ) will able to resume the export of Rapeseed Meal to China once their registration with Chinese Ministry of Agriculture (MoA) is done which is cumbersome process and takes a long time.”
Meanwhile, Nafed on Nov 7 sold 4,700 metric tonnes (MT) of mustard between Rs 3,860-3,891/100kg in Haryana and Rajasthan. It has so far liquidated around 3.81 lakh MT and now balance stock is at around 4.97 lakh MT. The agency had bought around 8.78 lakh tonnes of mustard during rabi 2017-18 at MSP under Price Stabilization Scheme (PSS).
Offtake in mustard seed is very low as only major crushers are doing crushing due to disparity and poor demand in mustard oil.
Small mills have either reduced production capacity or shut their operations not only due to disparity, but also due to liquidity crunch amid slow payment circulation between buyers to sellers.
India mustard seed crushing dropped 5% year-on-year at 4.5 lakh tonnes in November, according to data compiled by the Mustard Oil Producers Association of India (MOPA).
The crushing activity, however dropped 25% from 6 lakh tonnes a month ago October.
Good sowing pace of rabi mustard seed in the country too have weighed on market sentiments. Meanwhile, sowing of mustard seed is in its last phase.
According to many traders, Mustard seed crop is likely to be better this season as acreage is likely to rise by at least by 5-10%, however another group of traders have raised doubt due to low rainfall in many key producing belts.
Mustard/rapeseed acreage as on Dec 5 was higher by 1.2 percent at 59.55 lakh hectare from 59.36 lakh hectare., according to agri ministry.
The most-active January mustard seed futures settled this week with loss of 0.45% at 4,001/100kg after trading in the range of Rs 3,986 to Rs 4,036. Volume in open interest increased gradually along with fall in prices indicating downside may continue in the near term.
Conclusion
Mustard seed price is expected to trade steady to weak ahead due to good rabi sowing pace followed by slow sales of mustard oil and liquidity issue. Long term outlook will however mainly depend on how the crop progresses during the key growth period. A good crop will certainly dent market sentiment, while any losses occurrence amid adverse weather may provide bulls an edge.
Technical Idea
Mustard Seed January Futures - Resistance At Higher Range
Resistance will be at 4001-4006-4031. Lower range can be 3976-3921.
Traders short and holding the same can maintain the stop loss at 4086.
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(By Commoditiescontrol Bureau; +91-22-40015533)
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