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Mustard attains New Highs this year – what will happen in 2021

Abhijeet Banerjee
Abhijeet Banerjee
Mustard
Mustard Crop

News Highs Established in 2020: Mustard prices have appreciated sharply after the Corona related problems started reducing, giving stockists, investors, traders and farmers decent returns on their purchase/production costs.

RM seed prices were seen in a moderate range during 2019, but there had been wider price swings in 2020, and as against peak arrival season’s levels i.e. April month’s average offers, prices are up more than 40% currently. The commodity was able to attain new highs around 6500-6600 (Best grades) this year due to significant improvement in demand for mustard oil as well for the mustard/RM seed. In fact, mustard even surpassed 5000 level after so many years.  

Sharp appreciation in edible oils has also attributed to the price gains in addition to lowering inventory against a reduced crop size of 2019-2010 Rabi season, which was negatively affected because of heavy and untimely rainfall across regions of Haryana and Rajasthan during March and April months. There was an intermittent downward phase after Diwali and the upward trend resumed December onwards and ended the year on a healthy note. Government’s hike in RM seed MSP by Rs.225/quintal, to Rs.4650/quintal had encouraged buyers’ participation after the third week of September.   

Can Markets Resume the Upward Trend: The fundamentals for RM seed overall are positive due to which spot prices are stable these days. As per market talks, stockists’ demand is likely to improve January onwards. Lowering inventory levels due to drop in last year's production and steady offtake in mustard oil from retail markets be another bullish driver as of now.  Winter season demand shall remain healthy while new season harvest is still far away. As per market assessment's current inventory held by private players and NAFED is around 12 Lakh tonnes and unless the new crop arrives, the existing inventory shall be just sufficient to balance the consumption.

NAFED has to maintain some buffer against adverse situation therefore may not sell much in the physical trade centres. At the same time, fundamentals for palm oil and soybean remain bullish for the upcoming quarter. All in all the yearly Price view is bullish for next quarter and it is possible after an intermediate downward pressure during the new season period i.e. between March and April, prices can resume upward journey afterwards. 

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