Mustard oil prices go up 7% on low output

After wheat, pulses and onion, it is the turn of mustard oil to get expensive. Mustard oil prices have gone up by about 7 per cent this week, owing to higher prices of mustard.

Low mustard production, coupled with some crop damage due to unseasonal rains in March, has led to prices spurting by Rs 150-200 a quintal this week.

The prices of the commodity went up to Rs 1,800-1,850 a quintal in mandis of Rajasthan, the country's largest mustard-producing state. The higher prices are being supported by improved demand from crushing mills.

"While sowing has been low this year, the situation has worsened as rains damaged crops. Arrivals are lower compared to the last year. In Madhya Pradesh, mustard is selling at Rs 1,800-1,900 a quintal. Mustard oil prices have moved up from Rs 700 (15 kg tin) to Rs 750 over the last five days," said Ramesh Garg, chairman of K S Oils.

Edible oil has a weightage of 2.76 per cent in the Wholesale Price Index (higher than cement's 1.73 per cent, wheat's 1.38 per cent and 2.45 per cent of rice) and its rising price is likely to show up on the inflation figures in the coming weeks.

"The cost of producing mustard oil has gone up due to high mustard price. Though mustard arrivals are good, millers are not able to buy at high rates," said D P Khandelia, managing director of Khandelia Oil and General Mills.

According to the second advance estimates released by the government in February, rapeseed and mustard production this year is estimated at 75.6 lakh tonne against 81.3 lakh tonne last year.

Farmers in Rajasthan, Madhya Pradesh and Uttar Pradesh have shifted from oilseeds to wheat and chana due to better realisation in these commodities.

According to estimates by the Central Organisation for Oil Industry and Trade, rapeseed and mustard production this year will be 62.20 lakh tonne.

Even the National Agricultural Cooperative Marketing Federation (Nafed) that procured 21 lakh tonne mustard last year at a minimum support price of Rs 1,715 a quintal is facing problems in buying the commodity this time due to high prices.