Mustard-seed supply from March to November was 68 lakh tonnes, with carried-forward stocks with farmers, processors and stockists estimated at 11 lakh tonnes.
Rabi oilseed with the largest output, mustard seed was in a bear grip in November, declining more than 5 percent from the previous month. Mustard-seed markets were adequately supplied in 2018 due to higher output; thus, prices did not hold above Rs 4,250 throughout the year.
Nevertheless, the fall was contained as demand was good enough to meet mustard-meal exports, which more than doubled in FY 2018-19.
From April to November 2018, mustard-meal exports (of 7.45 lakh tonnes) rocketed 90 percent from the corresponding period in 2017. Meal exports are at a three-year high and, with China as a new importer, scope for exports has further risen.
However, no fresh deals have been signed with China so far and traditional buyers such as South Korea, Thailand and Vietnam are the major importers. Mustard-seed supply from March to November was 68 lakh tonnes, with carried-forward stocks with farmers, processors and stockists are estimated at 11 lakh tonnes.
The 2017-18 season is coming to a close and markets are now eyeing developments in the new season crop, sowing of which began last month. Despite less attractive returns in 2018, farmers in the largest mustard-growing state (Rajasthan) opted for this crop. Optimism about meal exports and guaranteed returns over other parallel crops are attracting farmers.
By the last week, the area under mustard seed was 57.89 lakh hectares, up 4.3 percent from the same period last year. In Rajasthan, by end-November sowing on 22.48 lakh hectares was 10.6 percent higher than in the corresponding period last year.
The current sowing figure depicts an optimistic crop picture for the 2018-19 season, but weather conditions during the growing phase are key to a good yield. On the price front, considering the good export prospects we don't expect the mustard seed to stay below Rs3,900. If the weather turns adverse, mustard-seed prices may spike in coming weeks.
(The author is Head - Commodity Research & Advisory, at Anand Rathi Commodities.)Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.