September Week 2: Mustard Market Fluctuates Amid NAFED's Sale

Mustard Seeds, a staple in many Indian kitchens and a significant agricultural commodity have recently been caught in a whirlwind of price fluctuations. Last week began with Mustard Seeds opening at Rs. 5,925 per quintal in Jaipur on 4 September 2023, but by 9 September 2023, prices plummeted to Rs. 5,775 per quintal. This staggering drop of Rs. 150 per quintal was attributed to a decrease in demand, sparking panic in the Mustard market.

NAFED’s Sale Sparks Concern

The market’s jitters were further amplified by the news of the NAFED starting the sale of Mustard on 18 September 2023. NAFED currently holds approximately 11.10 lakh tons of Mustard stock, and the announcement sent shockwaves through stockists and farmers alike. This apprehension led to increased selling pressure, ultimately causing Mustard prices to slide by up to Rs. 200 per quintal in just one week.

Key Updates

1.   Traders React Swiftly: Traders, ever vigilant for market trends, also swiftly adapted their strategies in response to NAFED’s sale. In anticipation of lower prices, they began lowering their buying rates by up to Rs. 200 per quintal. This shift in trader behaviour had a ripple effect, impacting not only Mustard Seeds but also their derived products.

2.   Crushing Margins Impacted: The decrease in both Oil and Seed prices negatively impacted the crushing margins of Mustard. Some companies halted their procurement activities until NAFED’s Mustard procurement officially began. The quality of NAFED’s existing stock is expected to remain low, intensifying the need to closely monitor selling prices.

3.   Oil & Cake Prices Affected: The drop in Mustard Seed prices also affected Mustard Oil and Mustard Cake prices. Mustard Oil became cheaper by Rs. 5-6 per kilogram, and Mustard Cake prices dropped by Rs. 2-3 per kilogram. This created challenges for companies involved in Mustard processing.

Market Outlook

Given the ongoing turbulence, it’s challenging to make precise predictions about Mustard prices. The mustard quality offered by NAFED during its sale will play a pivotal role in determining the final selling price. The precise price at which NAFED will begin selling its Mustard remains uncertain. Before NAFED’s announcement, Mustard Oil demand was already low. Now, experts are warning of a possible further drop in Mustard prices by Rs. 200-250.

Raw Mustard Seed prices may also fall by up to Rs. 1,000 per quintal. As such, traders are advised to exercise caution and await NAFED’s procurement before making new purchases.

OFB’s Insight

The Mustard market is currently experiencing unprecedented volatility due to NAFED’s impending sale and a lack of demand. It’s advisable to wait until NAFED’s sale officially begins before making any significant purchasing decisions. The quality of the Mustard offered, market sentiment, and the response of buyers will all play crucial roles in determining the market’s future direction. As consumers, we may see some relief in Mustard product prices, but it’s essential to stay informed as the situation continues to unfold.