Nafed restarts weekly mustard sales

The National Agricultural Cooperative Marketing Federation of India (Nafed) is now seeing good demand (at a good price) for its procured mustard, said Alok Ranjan, managing director, Nafed.

While it was able to sell off 1,600 tonne in its weekly tender that went through (after rejecting seven consecutive tenders on grounds of less price offered), it was also able to sell another 3,000 tonne today in the daily tenders.

"The weekly tender was sold at Rs 1,685 per 100 kg at Jaipur and Gwalior. It is the first one to go through after we rejected seven consecutive ones for want of a better price," Ranjan said.

But it seems that the good news has just begun to pour in for Nafed. Today, as part of the daily tenders, the federation sold 3,000 tonne at Indore and Jaipur. "The Indore sale was of 1,000 tonne at Rs 1,720 per 100 kg, making it the best price we have got till date. The Jaipur sale was of 2,000 tonne at Rs 1,690," he added.

Now, Nafed is also witnessing an increase in demand not only due to forthcoming festival season but also for the fact that it is the only buyer in the market today with its huge stock of 20.9 lakh tonne, said a Mumbai-based trader.

Including the latest sale, Nafed has sold 39,000 tonne of seed with about 19,000 tonne sold only in the last fortnight.

Market players expect demand for mustard to continue despite huge imports of other edible oils. This is largely due to a degree of non-exchangeability element with respect to mustard's pungency and colour.

While, traditionally, supply is lower in the August-September period, this is not the case this year. This year, huge stocks may lead to supply outpacing demand and price gains may remain lower, analysts said.

Jaipur spot price and NCDEX futures are currently at around Rs 353-356 per 20 kg level.

Prices of mustard are seeing support following rally in soy complex prices. Soy complex prices are rising in the wake of no rainfall in the soybean growing region of Madhya Pradesh.

As per weather forecasts, rains are expected in the region around weekend and this may push prices down.

Market players also believe that prices will soften as and when Nafed begins to sell mustard in a big way. Further, the huge stock of imported edible oils is creating a glut.

"We have bought mustard at Rs 1,700 per 100 kg and after the carryover costs, our cost price will be at least around Rs 1,870 per 100 kg," Ranjan said.

Nafed has procured mustard at an all-time high of 20.9 lakh tonne at the minimum support price of Rs 1,700 per 100 kg in the financial year 2005-06. The procurement was made under the price support scheme of the Union government.

The government had initiated procurement of mustard in a bid to support prices following a bumper crop.

As per official estimates, the country's total mustard output in 2004-05 (July-June period) is around a record 7.64 million tonne, up 23 per cent from a year earlier. Industry estimates, however, peg the same at 6.4 million tonne.

ON A ROLL

Market players expect demand for mustard to continue despite huge imports of other edible oils

Nafed has procured mustard at an all-time high of 20.9 lakh tonne at the MSP of Rs 1,700 per 100 kg in the financial year 2005-06