1. Commodity News

Bird’s Eye View of Global, Domestic Mustard Markets

Abhijeet Banerjee
Abhijeet Banerjee
Mustard crop

Global Markets Quiet: World Mustard seed markets have been trading with quiet tone since last two weeks. Most of the processors and exporters in North America have shown meager interest in participating in the physical markets. There are lower deliveries to licensed primary elevators in Canada and the number is lesser versus last year’s same period. Subdued demand continued to be a matter of concern for the trade participants. Limited trading activity is seen across Canada and North American markets currently, and this year's harvest is about to finish in the respective growing regions. Canada's harvest was almost complete during the recently ended week and reports say not more than 1% of the crop remains in fields. 

Domestic Markets Remain Positive: Indian markets on the other hand continued trading with a positive note in last two weeks. Mustard prices after establishing low of 3875-3900 (NCDEX specified Grade) in the month of March, stabilized in April, and have been rising since then. Year 2020 has been quite rewarding for farmers as well as traders/stockists surely. As against peak  arrival season’s levels i.e. versus March-April offers, prices are up nearly than Rs.1500/Qtl - sharp appreciation of 39% approximately.  Mustard prices have gone beyond 5000 level after so many years and still hold much above.  These days NCDEX specified grades are being offered near Rs.5450-5500/qtl.  Sharp appreciation in edible oils has attributed to the price gains in addition to healthy retail end demand. Festive season demand and growing importance of RM seed as an immunity booster for humans keeps consumption quite impressive. The old season crop was adversely affected because of heavy rainfall across regions of Haryana and Rajasthan during March and April months. Lowering arrivals in Mandis have also favored the price rise in present term.  Due to heavy rains during March and April, the loss in previous year’s crop is estimated around 20-25% roughly by traders, farmers and official agencies.  

FSSAI Related Developments: Just couple of days back the Delhi High Court has stayed the directions issued by the Government of India to the Food Safety and Standards Authority of India whereby it prohibits blending of any other vegetable or edible oil with mustard oil to facilitate the sale of pure mustard oil for domestic consumption in the public interest. The order has emerged in a writ petition filed by the BR Oil Industries Limited in which it challenged the directions issued by the Central Government to prohibit the blending of mustard oil with other vegetable oil. 

The Delhi High Court had stayed the directions issued by the Government of India to the Food Safety and Standards Authority of India prohibiting the blending of mustard. Earlier, the Food Safety and Standards Authority of India (FSSAI) on September 23rd had prohibited the mixing of other vegetable oils with mustard oil from October 2020 onwards, in order to ensure the safety in consumption of mustard oils in the country. The decision was taken after a thorough investigation, being was carried out earlier this year. Nearly 4500 odd samples of edible oils were collected across the country for the investigation, and the samples included branded /unbranded oil manufacturing brands, and both national as well as local brands. In all, this move was seen as a key decision to ensure the purity of mustard oil, also keeping the manufacturing and sale of pure mustard oil (for domestic consumption), in public interest. But post this announcement there were dissatisfaction among few segments especially the solvent extractors who complained the government and media that it would not be feasible to carry the extractions profitably after this decision, under given scenario. 

Because of higher prices of mustard oil, there exists crushing disparity therefore when mixing was allowed, then the plants were still able to carry their processing operations profitably. But with the banning of mixing other vegetable oils with mustard these plants had the compulsion to produce 100% mustard oil which implied that more of mustard seed was required to be crushed. So under given scenario when crushing disparity exists, carrying operations with same capacity would not be economical as per most of the solvent extractors. As a result the stay order has been executed by the government. The decision of the Central Government to prohibit mixing of other vegetable oils with mustard oil has been stayed by the court till the next date of hearing. 

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