Mustard seed has seen considerable ups and downs in the past four quarters. Prices may trade within a range till the harvesting of new crop in February, but arrivals may exert pressure on prices thereafter. In the first quarter of 2018, mustard prices went up towards Rs 4,150 per quintal as the production estimates pointed towards 10 per cent fall in output. The mustard acreage, sown in September-October, was 5 per cent down. On the other hand, exports of meal surged 122 per cent to 323,000 tonnes in the quarter against 151,000 tonnes during the same period last year.

Between April and November 2018, country exported more than 746,000 tonnes of mustard meal. Top export destinations for Indian mustard meal are South Korea, Thailand and Vietnam, accounting for about 87 per cent of volumes. Exports to South Korea increased by 92 per cent to 350,000 tonnes in 2018-19 against previous year while exports to Thailand doubled in the same period to 182,000 tonnes. The increased demand for meal saw improved crushing at the mills and this too supported the prices in the first quarter, said Ritesh Kumar Sahu, fundamental analyst, agri commodities, Angel Broking.

However, by April prices fell more than 6.3 per cent due to new season arrivals. Arrivals until November-end had crossed more than 6.7 million tonnes, up more than 25 per cent compared with last year. Contrary to the earlier estimates, the revised production data showed increase in output. Mustard output in 2017-18 was 7.1 million tonnes, up from 6.9 million tonnes in the previous year, according to a revised estimate by the central organisation for oil industry and trade (COOIT).

By May-June there was a recovery of close to 6 per cent in prices as the various state governments announced plans to procure mustard seed. The crushing of the new crop also picked up during this time.

By the third quarter, the demand for crushing went up as the meal exports improved. As fallout of the trade war with the US, China removed import restrictions on mustard meal and this increased exports. Prices recovered to Rs 4,150 per quintal in this quarter. Mustard once again started its downward slide in the fourth quarter. The government fixed the minimum support price for mustard at Rs 4,200 per quintal against Rs 4,000 per quintal in the previous year. However, this was much lower than what the farmers had expected.

Further the sowing started in Rajasthan and Madhya Pradesh on a good note. Rajasthan is the largest mustard producing state followed by Madhya Pradesh, Uttar Pradesh and Haryana. As per reports, mustard acreage in Rajasthan may increase in the coming season. As on December 14, mustard acreage in Rajasthan was 2.32 million hectares, up 12.7 per cent over last year. Overall mustard seed acreage in the country is pegged at 6.31 million hectares, up from 6.13 million hectares last year.

Moreover, Chinese exports too didn’t match expectations as strict quality parameters lowered demand for Indian mustard meal. By the time, the US-China trade row also was seen cooling and this too brought down the prices in the fourth quarter.

Mustard seed is currently trading around Rs 4015 per quintal. “Going forward, mustard futures may trade mostly in a range of Rs 4,000-4,200 per 100 kg as mustard meal export to China is still a concern on easing trade war with the US. But improving meal imports from South Korea and Thaiand, lower stocks with the farmers and oil mills may keep prices in a range but the season trend is suggesting that the prices may trend down during January-February,” said Sahu.

sangeethag@mydigitalfc.com