Commodity News

Mustard Turns Highly Rewarding for Farmers – Prices Up 30% Since March

Abhijeet Banerjee
Abhijeet Banerjee

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. Surely this year has been quite rewarding for farmers as well as traders/stockists. Prices were seen in a moderate range last year but this year there has been wider price movements especially on upper side. As against peak arrival season’s levels, prices are up more than Rs.1100/Qtl or nearly 30% nearly, in just 5 months. In fact, mustard has surpassed 5000 level after so many years and currently holds much above. These days NCDEX specified grades are being offered around Rs.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. Lower supplies have also favored the price rise in recent months. According to traders and farmers possible damage of previous year’s crop is estimated around 20-25% roughly. India’s production for year 2019-2020 is now expected near 70 Lakh tonnes versus 80 lakh tonnes during 2018-2019 marketing season.  

Demand for Mustard oil remains healthy due to increase in household consumption, being influenced from the Rainy season. Procurement from the government had also supported rise in prices during the quarter ending on June 30. According to trade sources total procurement in the leading producing states of Rajasthan & Haryana  - two leading producing states, have reached roughly 12 Lakh tonnes this year. Rajasthan contributes about 49% to the county's total mustard production, followed by Uttar Pradesh (11%), Haryana (11%), All in all, procurement of Mustard had ended with a satisfactory pace in the country despite the Covid -19 outbreak.  In present term NAFED is selling whenever prices register sharp gains but this is not increasing supply burden in markets because there are ready buyers.

Price outlook positive till December: 

Demand for mustard oil is expected to remain healthy for next few months as the festive season shall continue till November/December. Major edible oils like palm oil and Soybean oil are expected to maintain higher prices in coming months which will be another supporting factor for price rise in mustard oil. At the same time, mustard oil is also used for boosting immunity therefore under given scenario this valuable property will be another aspect in enhancing domestic demand. All in all prospects for further price appreciation remain higher for mustard. Therefore farmers who are still holding, or planning to sell their balance stocks, should continue holding for getting additional profits. Currently market views regarding mustard indicate that wholesale prices may rise by another Rs. 500-600/qtl from current rates by November or December.  

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