Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):
"Mustard seed futures prices have gained momentum in the second half of the current month and heading for highest single month gain in the year 2017. The prices have moved up on expectation of improved winter demand and reports of increase in Minimum Support Price (MSP) by the government. The seasonal index based on last five years monthly average prices also suggest that the prices increase during the month of October and November. However, the price tends to ease in December till the month of February next year as stockiest off-loads the old crop in the physical market.
During the current month, Rapeseed-Mustard seed (RMSEED) futures contract on the National Commodity and Derivatives Exchange (NCDEX) has surged about 5.5%. This positive trend in mustard seed prices have begun in the month of June when the price jump about 3.6%, while in July and August, the rise was 2.5% and 2% respectively. However, the prices have corrected about 0.9% in September pressured by lower crushing volume.
As per data compiled by Mustard Oil Producers Association of India (MOPA), Oil mills across the country crushed 425,000 tonnes of mustard seed in September, down around 6% from previous month.
Thus, since the start of June, the prices have moved about 13% higher.
The prices started to improve due to higher meal exports during the first 6 months of new financial year coupled with increasing demand for winter crushing as spot prices have been 20% less in the prices during last year. Exports of Mustard meal increase by more than 76% to 42,661 tonnes mainly due to lower meal prices compared to last year. Last year average FOB price from the country for rape meal was $282 per tonnes but the prices have reduced to $236 in current year.
The prices of mustard supported on improve as Cabinet Committee on Economic Affairs (CCEA) increase MSP for 2017/18 Mustard seed crop by 8.1% to 4,000 rupees per quintal from Rs. 3,700 last year to encourage farmers to grow more mustard.
Moreover, import of mustard oil during the oil year 2016/17 was sharply down to 2.55 lakh from 3.33 lakh tonnes a year ago mainly due to availability of cheaper mustard oil from domestic crushing. Since the start of the crushing season in February 2017, oil mills have crushed about 43 lakh tonnes of mustard seed compared to total arrivals of 46 lakh during the period according to data compiled by MOPA.
Last year, country has produced 69 lakh tonnes of mustard in the year ended June, higher by 19% compared to 58 lakh tonnes in the previous year, due to higher acreage, better yields and favorable weather conditions."