Festive demand and an anticipation of a decline in rabi sowing of mustard has led to a 6 per cent spurt in mustard oil prices this month. Mustard oil price has increased from Rs 49 to Rs 52 a kg on an average as mustard seed price rose from Rs 2,150 to Rs 2,275 a quintal.
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"Since the minimum support price (MSP) of wheat has been hiked from Rs 750 to Rs 1,000 a quintal, there is a likelihood that farmers with irrigation facilities will shift from mustard to wheat in a big way. In addition, there is an improved festive demand and we expect an uptrend till Diwali," said Ramesh Garg, chairman of K S Oils, the country's leading mustard oil processor.
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Though the MSP of mustard has also been increased from Rs 1,715 to Rs 1,800 a quintal, this is only an increase of 4.96 per cent compared with 33.33 per cent in wheat.
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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.
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"Since we import about 45 per cent of our edible oil requirement, domestic prices are impacted by the firm international edible oil situation", said D P Khandelia, managing director of Khandelia Oils and General Mills.
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Domestic oilseed crop is also low this year. According to the fourth advance estimates by agriculture ministry, the oilseed production this year is 23.88 million tonnes, 14.65 per cent lower than the last year's final estimates of 27.98 million tonnes, mainly because of a shift in the Rabi oilseed area to wheat and chana.
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The mustard production is seen at 7.10 million tonnes, down 12.66 per cent from the last year's 8.13 million tonnes. The low crop has led to a fall in procurement of mustard by the national agricultural cooperative marketing federation (NAFED), the government's oilseeds procurement agency.
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The federation had procured 2.1 million tonnes mustard in the 2005-06 rabi season at a MSP of Rs 1,715 a quintal and 2.09 million tonnes in 2004-05 at a MSP of Rs 1,700. However, this year the federation was able to procure only 21,000 tonnes at a price of Rs 1,715.
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ON A HIGH
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Mustard oil price has increased from Rs 49 to Rs 52 a kg on an average as mustard seed price rose from Rs 2,150 to Rs 2,275 a quintal
There is a likelihood that farmers with irrigation facilities will shift from mustard to wheat in a big way
The minimum support price of mustard has also been increased from Rs 1,715 to Rs 1,800 a quintal |
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