Mustard oil jumps 7% in a month

Mustard oil prices have jumped by about 7 per cent in the last one month, owing to an increase in mustard seed prices. Industry experts expect the firm trend to continue.

"The mustard oil that was selling at Rs 760 (15 kg tin) a month ago is now selling at Rs 815 due to an increase in the cost of mustard seeds, which has moved from Rs 1975 to Rs 2175 a quintal. Rates may stabilise at the current level but the future trend is expected to be firm due to a drop in mustard production," said Ramesh Garg, chairman of K S Oils, the country's leading mustard oil processor.

Farmers in oilseed producing states of Rajasthan, Uttar Pradesh and Madhya Pradesh have diverted land from oilseeds to crops such as wheat and chana owing to bullishness in these commodities, resulting in a decline in production.

"Since we import about 45 per cent of our edible oil requirement, domestic prices are impacted by the international edible oil situation, which is also firm this year", said D P Khandelia, managing director of Khandelia Oils and General Mills.

According to the third advance estimates by agriculture ministry, the oilseeds production this year will be 23.26 million tonnes, 16.8 per cent lower than last year's final estimates of 27.97 million tonnes.

The mustard production is seen at 6.69 million tonnes, down 15 per cent from last year's 7.88 million tonnes.

The low crop has led to a drastic fall in procurement of mustard by the National Agricultural Cooperative Marketing Federation (Nafed), the government's oilseeds procurement agency.

The federation had procured 2.1 million tonnes mustard in the 2005-06 rabi season at a minimum support price (MSP) of Rs 1,715 a quintal and 2.09 million tonnes in 2004-05 at a MSP of Rs 1,700 a quintal.

However, this year the federation was able to procure only 21,000 tonnes of mustard.

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.