September Week 1: Sustained Mustard Demand Sparks Price Surge

Last week, the Mustard market in Jaipur witnessed some exciting developments with the price starting at Rs. 5850 – Rs. 5900 per quintal on 28 August 2023 and closing at Rs. 5900 per quintal on 2 September 2023. The reason behind this trend was steady demand. Let’s explore more about the same: 

Steady Demand Boosts Price

The primary driving force behind the Mustard price surge was the sustained demand for Mustard Oil. This surge in demand was driven by a combination of strong domestic and export interest. Compared to other Oils, Mustard Oil commanded a premium price.

Contrasting Performance

In contrast to Mustard Oil, other edible Oils witnessed a slight price decrease. This drop can be attributed to weaker demand, ample stocks, and softness in international markets. Mustard Oil, on the other hand, saw an increase of Rs. 60-70 per quintal.

Mustard Oil’s popularity on both the domestic and international fronts played a significant role in its price surge. The export ban coupled with robust domestic demand, kept the prices on an upward trajectory. This combination led to a favourable environment for Mustard Oil sellers.

Stable Prices Amidst Weak Arrivals

While the demand was surging, Mustard prices managed to remain relatively stable. This stability can be attributed to the weak arrivals and normal demand from Oil mills. Another significant factor contributing to these price fluctuations is the limited Mustard Oil stock availability. Crushing activities have been weak, further exacerbating the Mustard Oil scarcity in the market.

Mustard stocks remain limited. According to estimates, 5.5 lakh tons of Mustard were recorded in August 2023. The limited supply compared to growing demand continues to put pressure on the Mustard market.

Government Intervention

The government plays a significant role in the pricing of essential commodities, and Mustard is no exception. The government has refrained from releasing Mustard stocks thus far, reserving them for a more strategic time. Releasing stocks prematurely could disrupt the market, and they might lose control over prices in the coming months. While a significant drop in Mustard prices isn’t on the horizon in the near term, there is potential for an uptick before Diwali.

The Indian government is actively monitoring the situation to control the rise in food prices, especially with a weak monsoon season. 

OFB’s Insight

Mustard prices have been relatively stable despite a surge in demand. Limited stocks of Mustard oil, weak crushing activities, and differing demand dynamics between Mustard Oil and other edible Oils have all played a role in shaping the current market conditions. With government intervention, the Mustard market is poised for an interesting journey in the coming months. While a significant price drop may not be imminent, the possibility of an uptick before Diwali keeps market enthusiasts interested.