Mustard Markets Observe Sharp Gains, Moderate Fall Likely Early this Week

Mustard markets traded with positive note last week with spot offers at Jaipur crossing even the 4600 mark. Moreover, NCDEX June RM seed also posted sharp gains and registered new contract of 4520 last week. There was good buying interest among retailers for mustard oil which helped mustard seed in maintaining throughout the week. But prices failed to sustain higher during last two days of the week as prices had gained significantly and chances of selling interest to improve turned better, which prevented buyers to offer higher price quotes. In the futures markets the June RM seed was already overbought. Hence as spot markets failed to sustain higher profit taking of buyers increased. As a result, long liquidation pressure increased (selling pressure due to closing of buy/long positions), resulting in lower finish on Friday.  

Mustard crop is expected to be lower this year due to heavy rainfall across regions of Haryana and Rajasthan during March and April months. This increased the risk of crop damage hence production is estimated to be lower versus last year. Possible damage can be to the extent of 20-25% as per farmers/trade sources. Confirmed reports are still awaited from government agencies. This factor shall continue limiting the downside in coming weeks. Stable demand for mustard/RM seed oil shall be another key fundamental that will be keeping prices on upward track. Procurement from the government has also supported the market in recent months and shall continue supporting as long as procurement continues.  

Mustard crop procurement began in Haryana on April 15, and the procurement centres were up outside mandis so that farmers can sell their crops while maintaining social distance. As per Haryana Agriculture Minister, mustard is being procured at minimum support price of Rs 4,425 per quintal as fixed by the government. About 6.5 lakh metric tonnes (MT) of mustard was procured in Haryana last year, but this time around 8-9 lakh MT of the crop is expected to be procured. Procurement in Rajasthan also commenced April onwards and still continues. Till now total quantity of mustard procurement in the states of Rajasthan and Haryana has reached 11 Lakh tones approximately. Although government purchases shall continue for few more weeks, Haryana may cease purchases soon as per sources. Farmers have been holding the produce till now and with offers tuning high, chances are bright that they will be encouraged to bring more quantities for sale in the Mandis in coming week.  

Therefore under current scenario it is quite possible that increase in farmers’ selling or slowing purchases from Haryana, upward movement can cease for a while. With monsoon progress reported satisfactory and forecast to arrive Kerala by June 1^st, chances for sowing prospects to improve in Kharif or summer crops will rise, and this will also put cap over rise in mustard prices. Most traders feel that fall in prices might be seen during initial days of the week but moderate upside may be observed post midweek due to stable edible oil demand, and ongoing government purchases/procurement.  

Prices at Jaipur during recently ended week 

Source: Trade persons from Jaipur