Mustard prices rise 12% on falling stocks

The prices of mustard and mustard oil in the domestic market have surged by 10-12 per cent since November on fall in crop output and a decline in stocks with the National Agricultural Cooperative Marketing Federation (Nafed).

In Delhi, spot mustard price has jumped from Rs 1,625-1,850 per quintal to Rs 1,850-2,030 over the period. Consequently, price of mustard oil has also increased from Rs 4,300 a quintal to Rs 4,700.

According to the ministry of agriculture, the area under rapeseed mustard has declined by more than 9 per cent in this rabi season. About 65.43 lakh hectare has been sown under rapeseed mustard, as on December 21, significantly lower than the 71.80 lakh hectare sown over the same period last year.

Farmers in Rajasthan, Madhya Pradesh, etc have shifted from oilseeds to wheat and chana as they expect them to give better returns. In 2005-06, the country had a record mustard production at 78.87 lakh tonne against 76 lakh tonne in 2004-05. However, a decline in production is expected in the 2006-07 season.

Currently, Nafed is left with only 13 lakh tonne of mustard. "We have sold nearly 20 lakh tonne mustard since July. In July, our mustard was sold at an average rate of Rs 1544 per quintal. However, at present our mustard is selling at Rs 1650-1765 per quintal at various locations", said Kailash Jyani, additional managing director, Nafed.

The federation had procured 21 lakh tonne mustard this year apart from having a carryover stock of 15 lakh tonne from last year. The price of mustard tracks soybean prices closely and the current bullishness is owing to the rising soybean rates, said a Karvy analyst.

According to Rajesh Agarwal, spokesperson of Soybean Processors Association of India, there is increased speculative buying in soybean owing to the bullishness of the commodity internationally.

Since November, the soybean spot price in Indore has gone up from Rs 1100-1150 per quintal to Rs 1350-1400.