The mustard crop has suffered substantial damage in several States in the northern and central parts of the country due to unseasonal rain and hailstorm last month.

According to the Agriculture Ministry, 17.77 lakh hectares (lh) of the crop have been damaged in Rajasthan, Haryana and Uttar Pradesh. This is about 25 per cent of the area planted during the rabi sowing season.

In Rajasthan, the country’s biggest producer of mustard, crop on 15.05 lh has been destroyed.

The impact of damage has been felt over the last couple of weeks as prices have moved up in mandis across the country.

However, there has been an uptrend in mustard prices in the derivatives market since the second half of last year in anticipation of lower sowing due to poor monsoon.

Moreover, prices also surged during November and December on festival demand for mustard oil and expectation of an increase in customs duty on crude and refined edible oils.

But, the start of the New Year pegged the prices down on weak sentiments from other oilseed crops and anticipation of good yield on the favourable climatic conditions in the growing States. However, in the last six weeks, mustard prices have stabilised and are hovering around ₹3,350-3,400 a quintal on hopesof arrival of the new crop.

Area-production falls Mustard output is set to fall this season on lower area and crop damage. According to the latest government data, mustard cultivation fell 8.6 per cent to 65.17 lh compared with 71.32 lh a year ago.

In Rajasthan, mustard acreage has slid by 13 per cent due to moisture stress while in Madhya Pradesh and Gujarat, late harvesting of kharif crop such as cotton and soyabean impacted the planting.

Meanwhile, domestic mustard production is projected at 57.4 lakh tonnes (lt), down 12 per cent compared with last year, according to the Solvent Extractors’ Association of India (SEA).

However, with unseasonal rain and hailstorms reported in the growing areas, a damage of 10-15 per cent could further bring down the output.

Oil imports-meal export Mustard is an important source of edible oil and feed meal. India imports mustard oil while exporting meal.

According to the Solvent Extractors Association (SEA), the country imported 43,759 tonnes of mustard oil in January – a seven-fold increase compared with the volume shipped in January 2014.

However, during November-January period of the current oil season to September, import of mustard oil is 122 per cent higher compared with the same period a year ago.

Meanwhile, the export of oilmeal has also increased 22 per cent to 10 lakh tonnes for April- February period of the 2014-15 fiscal compared with the previous fiscal.

Record import of mustard oil and good export demand for oil meal indicate demand for oil and meal in the domestic and global markets, respectively.

Global output dips Global output is projected to fall for the first time in five years, led by a drop in European Union, according to the latest estimates by International Grain Council.

The council, in its first forecast for world mustard output in 2015-16, pegged the crop at 68.9 million tones (mt), down 3.8 per cent year-on-year.

Earlier, the EU’s withdrawal of neonicotinoid pesticide harmed the crop prospects.

Initial outlook pegs mustard production at 21.1 mt – down 12 per cent from a record 24.1 mt last year.

In Canada, production of canola, the mustard variant, is forecast at 16 mt, up 2.9 per cent but sowing is forecast to fall next season due to crop rotation.

Meanwhile, China, world’s largest importer, is set to produce mustard that will be 300,000 tonnes lower this year at 14.1 mt. Its imports are forecast to rise 400,000 tonnes to 4.5 mt in 2015-16.

Outlook Seasonal supply pressure generally keeps mustard prices on leash during the peak harvest season. However, in the current season, prices have seen a notable gain during extended price stability.

Lower production and planting projections worldwide along with good export and consumption demand point to mustard prices gaining over the next two months.

The writer is Associate Director-Commodities & Currencies, Angel Commodities Broking. Views are personal.

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