Mr. Riteshkumar Sahu (Research Analyst - Agri Commodities, Angel Broking)
"Mustard futures tumbled close to 11% since the start of sowing season in October last year on higher acreage, good climatic conditions and slowdown in exports for mustard meal.
May Mustard futures on National Commodities and Derivative Exchange (NCDEX) fell more than 1.5% from its Monday high to touch contract low of 3,755 rupees per 100 kg on Tuesday on concern about higher supplies of mustard due to bumper crop estimates.
Moreover, record edible oil imports and forecast of near normal monsoon by IMD this year put pressure on oilseed prices.
Currently, mustard prices in physical market are lower than soybean because of bumper supplies expected this season. As per Solvent Extractors Association of India (SEA), mustard seed output in 2018/19 is up by 19% on year at 81 lakh tonnes (lt). This increase in output attributed to better climate and increase in acreage.
In its monthly estimate, United States Department of Agriculture (USDA) also revised its production forecast to 80 lt in April from 66 lt last month.
On the export front, rape meal exports in March is provisionally reported at 50,964 tonnes (Vs 125,000 t), down 59.2% on year as per SEA press release. However, February rape meal exports figures revised higher to 79,463 tonnes from 41,728 tonnes. Overall, meal exports have crossed 10 lt in FY 2018/19, first time in last 3 years.
Rapeseed oil imports have taken a hit this season due to higher availability and cheaper rival oils like palm, soy and sunflower oil.
Going forward the positives for mustard seed would be government procurement at Minimum Support Price (MSP). In the current season, NAFED is expected to procure about 20 lakh tonnes of mustard at MSP of 4,200 rupees per 100 kg from various states. The prices may get support if meal exports improves in coming months. The distribution of monsoon in the states of Rajasthan, Haryana and Uttar Pradesh is also very vital for determining the further price direction."