Mustard oil prices likely to rise on heavy rainfall

Prices of mustard oil are likely to rise at least by Rs 2 a kg within a fortnight due to poor supply of seed for crushing in the wake of heavy rainfall across the country.

The best quality mustard oil is sold at Rs 45 a kg by mills, which translates into Rs 60-65 a kg for consumers. The fair average quality (FAQ) oil is sold at Rs 43 a kg in Mumbai.

Issues such as lower crop output and the decision of the National Agricultural Cooperative Marketing Federation (Nafed) to halt sales have also impacted the movement of mustard seeds despite the beginning of the harvesting season. Mustard seed season runs from March to June.

This year, mustard seed output is estimated to remain lower at 60 lakh tonne against 68.5 lakh tonne last year. It is mainly attributed to crop diversion to other commodities, including wheat and pulses.

Ramesh Garg, chairman, K S Oils, said, "This year farmers shifted to other profitable crops such as wheat and pulses. Prices of these commodities were high last year. Therefore, mustard oil price is expected to remain tight the whole of this year." The Madhya Pradesh-based K S Oils is the largest mustard seed crusher in the country with a capacity of 1000 tonne per day.

Nafed, the country's main mustard carrying agency, has stopped selling mustard seeds with an aim to sell at higher price towards the season-end. Sources said the Nafed has stocked up to 8.3 lakh tonne of mustard seeds.

The federation is hopeful of procuring 20 lakh tonne mustard this year at a minimum support price (MSP) of Rs 1715 a quintal. The federation had procured 21 lakh tonne mustard in 2005-06 rabi season (MSP of Rs 1715 a quintal) and 20.93 lakh tonne in 2004-05 (MSP of Rs 1700a quintal).

Of late, Nafed has been selling mustard in the range of Rs 1650-1700 a quintal.