Possibility of Strengthening Mustard and Mustard Oil Prices

Mustard prices have remained strong for a while due to a decrease in sowing area and a significant drop in arrivals at mandis in recent days. It is expected that the arrivals of mustard in the markets may further decrease in the coming days. According to the Ministry of Agriculture, the sowing area for mustard, the major oilseed crop of the rabi season, has fallen from 93.73 lakh hectares last year to 88.50 lakh hectares this year. Similarly, the total area for oilseed crops has decreased from 101.64 lakh hectares to 96.74 lakh hectares. The sowing of mustard has been completed in almost all states, and the average daily arrivals in mandis have dropped to below 2 lakh bags (50 kg per bag). Farmers, stockists, and millers have very little mustard stock left, while government agencies have about 10 lakh tons of stock. Half of the 20 lakh tons of mustard purchased at the minimum support price (MSP) from farmers has already been sold, and the government is continuing efforts to sell the remaining stock. The mustard production estimate for the 2023-24 season has been revised down from 121 lakh tons to 115 lakh tons. Typically, mustard arrivals begin in small quantities in February, with a surge in supply from March to May. The central government has raised the MSP for mustard from ₹5650 per quintal for the 2023-24 season to ₹5950 per quintal for the 2024-25 season. However, due to farmers disinterest in mustard cultivation, the sowing area has decreased. If the ban on futures trading in mustard and its value-added products is lifted, there could be a further increase in prices. In the coming days, with the wedding season and other major religious and cultural events, the demand and consumption of mustard oil are expected to rise. Mustard oil is commonly used more in households during the cold weather season.

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