Ajitesh Mullick
Agri markets traded with high volatility last week. Even as Monsoon reportedly covered the Indian sub-continent 12 days early (as per IMD), the uptrend was limited on intermittent rains in the main kharif growing areas of Central and North-West India.
The movement of agri commodities in the coming week will keep depending on the rains. But traders are not expecting too much fall in prices from these already lower levels. Oil complex looks firm. Evan as some profit booking got noted for Chana and Guar last week (due to Monsoon factor), overall fundamentals remain firm. Not much movement has been noted in Spices. But they may find support as exports gradually pick up in coming weeks.
Mustard Seed
Even as agri markets remained volatile over last few weeks, one specific counter (which is Mustard Seed) has been regularly moving up. Mustard seed fundamentals and technicals have remained firm. The bearish impact of COVID-19 (as observed in most agri counters due to closure of mandis and low trading activities) have not adversely impacted the price movement for this counter. This can be noted from the daily charts for July contract.
Trend remains firm for RM Seed on lower supply in mandis as most sellers in mandis seem to stop their sale for a while unless and until they get good rates again. Futures on the mid-week found support and ended firm. Upside movement in edible oils also supported the price trend.
Procurement from the government will end this month which also keeps prices lower currently. Nevertheless price outlook from broader perspective is positive therefore selling interest might halt soon, leading to recovery in price levels.
Procurement in Rajasthan commenced April onwards and still continues. Mustard crop procurement began. The Mustard crop is expected to be lower this year due to heavy rainfall across regions of Haryana and Rajasthan during March and April months. As a result the risk of crop damage has increased. Therefore production is estimated to be lower versus last year.
As per traders and farmers possible damage is expected around 20-25 percent roughly. This factor shall continue limiting the downside in coming weeks.
According to Haryana Agriculture Ministry, mustard has been procured at minimum support price of Rs 4,425 per quintal as fixed by the government.
As per reports, total quantity procured in both these states had gone above 11 lakh tonnes. While government purchases may continue in Rajasthan, Haryana government can halt purchases after June, according to trade sources.
Trend looks firm for the counter from these levels also. The July contract may well reach the psychological level of Rs 5,000 per quintal. Support for the contract is noted at Rs 4,600-4,620 per quintal.
The author is VP - Retail Research at Religare Broking.
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