The year 2011-12 for mustard can be categorized into two periods. The first half witnessed the bull run in mustard with prices peaking in the month of July while the second half of the year turned in favor of the bears.
Prices escalated during the start of the year 2011-12 as mustard crop supplies remained largely affected due to unfavorable weather conditions and a shift in acreage to other lucrative crops like Isabgol in certain regions. Supply fears drove prices from Rs 3200 per quintal in February to Rs 4550 per quintal by August. The gains were largely attributed to the sharp drop in availability while gains in other oilseeds like soybean also lent support.
However, the Indian monsoon which was late but gained momentum across the growing regions provided the much needed soil moisture. This eased some concern temporarily and prices started to cool off. This was followed by favorable weather conditions during the sowing and the growth stage of the crop which dampened bullish sentiments and the bears took over the driving seat.
Weather
The year 2012-13 turned out to be a favorable year for the rabi crops mainly due to favorable and crop friendly weather throughout.
Among the major rabi crops, mustard crop gained the most while others like groundnut, sunflower, sesame will not see remarkable gains in terms of crop production.
Favorable climate largely means apt temperature during the sowing season ranging between 25-30 degree centigrade and cool conditions during flowering and growth stage. The crop also requires 3-4 light showers which helps to increase the oil
content of the crop. Post the crop maturity it requires hot conditions for harvesting and drying.
Acreage
This year Rajasthan, the largest growing state witnessed such favorable conditions throughout the crop cycle and this will be reflected in its output. The showers during the crop cycle ensured the crop free from pests like "dhauliya" and "chepa"
which had affected the regions like Alwar, Bagru, and Dausa last year.
While towards the end of the crop cycle, Madhya Pradesh witnessed unseasonal rains in the month of March which has resulted in some damage to the so far good mustard crop. The extent of damage is not big but it help turn sentiments bullish temporarily.
The total acreage under mustard has witnessed a slight increase compared to last year. The acreage under mustard in the year 2012-13 is approximately 67 lakh hectares compared to 64.7 lakh hectares in 2011-12.
The rise in acreage largely came from North Western India which includes the states of Rajasthan, Haryana, Uttar Pradesh and Gujarat. These states account for about 70 percent of the total mustard production. The total land attributed to mustard in these states totaled approximately 46.5 lakh hectares compared to 44 lakh hectares last year.
Among the major regions in Rajasthan, Ganaganagar have witnessed a small drop in acreage this year and this is largely attributed to the late harvesting of the kharif crop of Guar.
Late monsoon progress resulted in late sowing of Guar as result of which there was a delay in the sowing process of mustard. However, favorable weather and the late showers helped increase the yield of crop significantly.
Despite a drop in acreage, production from this region is expected to increase. Total production from Shree Ganganagar and Hanumangarh is expected to be 5.5 lakh tons in 2012-13.
Demand and supply
Looking at the demand supply scenario, we see that the total supply of mustard this year is expected to be rise compared to last year on account of a rise in mustard production.
In the year 2012-13, production is expected to rise to 68 lakh tons compared to 55 lakh tons in the previous year. A drastic fall in production last year has resulted in a lower ending stock which is expected to be around 0.6 lakh ton. The total supply in 2012-13 is likely to be around 67.4 lakh tons, up by 13 lakh tons from the previous year.
Taking crush and domestic use into consideration, the total demand is expected to be around 60 lakh tons which mean closing stock is expected to be between 7-7.5 lakh tons at the end of 2012-13.
Major rise in production is seen from Rajasthan, the largest mustard growing state in India. Last year, production in this state was severely affected due to unfavorable weather conditions. The average production this year is expected to be around 30-32 lakh tons compared to 23-24 lakh tons last year.
Outlook
Other states like Uttar Pradesh and Haryana will also see a rise in production by almost 2 lakh tons each from the previous year. Production from Uttar Pradesh, Haryana and Madhya Pradesh is expected to be 22.5 lakh tons compared to 18.5
lakh tons in 2011-12.
The rise in production this year will ensure smooth supplies of the oilseed throughout the year despite low opening stocks for the year 2012-13.
On the global front, China has lifted the ban imposed on imports of mustard from Australia in March 2013 and have resumed trade with the first import totaling to 300,000 tons.
China has banned imports of rape meal from India in January 2012 after it was found that some consignments were contaminated with "malachite green", a dyestuff used for marking jute bags. The ban on India had benefited Canada's exports of rapeseed. However, if China lifts the import ban of Rapemeal on India it can lead to a spurt in mustard prices.
With ample supplies in the domestic market and India approaching the arrival season from April onwards, we expect prices of mustard to come under pressure. Arrivals which are currently about 280,000 bags are expected to rise to 3,80,000- 400,000 bags after the Indian festival of Holi and it is expected to ease post April.
Presently, gain in the soy complex, lower availability of mustard due to thin stocks and as most spot markets will remain closed during the last week of March is supporting mustard prices and this upside in prices is expected to be short-lived. Moves towards Rs 3500-3550 per quintal should be used to sell for the downside target of Rs.3300-Rs.3250/Quintal.
