Mustard Oil Prices May Slip Further Despite Low

MUMBAI: Mustard oil prices have come down following weakness in the global market coupled with a lack of domestic demand despite indications of a fall in production due to low acreage reports this rabi season.

Prices in the spot market in Jaipur have gone down from Rs 56 per kg to Rs 54 during the past one week. Even the most active rape mustard seed January futures contract on NCDEX is down from Rs 490 per 20 kg to Rs 471 on Thursday over the last seven days.

Angel Commodities analyst Badruddin said that the January contract is expected to go down to Rs 460 in the next couple of days. “ The weather is favourable with a good moisture content that will support sowing,” he said
K S Oils’ Ramesh Garg said that spot prices will decline further by Rs 2 per kg as prices between Rs 54 to Rs 55 per kg were still high compared to Rs 50 kg a month back. “ The level of Rs 55 is high and prices will go down further in the short term ,” said Mr Garg.

Mustard seed acreage till November 30 was down at 52.5 lakh hectares compared to 61.3 lakh hectares the previous year. The fall in acreage has been a result of unfavourable weather at the time of sowing between October and November and some acreage being shifted towards wheat because of a higher MSP.

According to Mr Garg, mustard seed production could top 50 lakh tonnes this year and taking into account the carry-over stock of approximately five lakh tonnes, the total oilseeds production will be 55 lakh tonnes. This will translate into 22 lakh tonnes of mustard oil which is six lakh tonnes less than the previous year’s production of 28 lakh tonnes.

Despite an increase in kharif oilseed production, the expected fall in rabi oilseed production will marginally increase the availability of edible oil this year. SS Agrawal of the Rajasthan-based Ashok Oil Industries said that the period from December till mid-January would be very crucial and if the weather is not favourable, mustard seed production may go down to 45 lakh tonnes.

Mr Agrawal said that the current fall in prices is on account of global factors with a fall crude prices and announcement of stocks positions in the US.