Update 1: Rapeseed-Mustard Crop Production and Price Outlook in India for 2016

On 24 Jan 2016, we expressed our views on likely scenario of Indian Rapeseed Mustard production and prices in the light of weather disturbance and sown area progress  under the article with the name “Recent Weather Fluctuations can trim India’s Rapeseed-Mustard Production and spark the prices during 2016”. The link of the article was given below http://prasoonmathur.blogspot.in/2016/01/recent-weather-fluctuations-can-trim.html)

Since then, there is marked increment in the reports of sown area under this crop. Thus we provide below the updated information on the same and consequently we also revise our production estimates. The likely price scenario is also modified little bit accordingly.

Latest Sowing Progress of Oilseeds in India

The sown area under Rapeseed-Mustard has increased to 64.51 lakh ha as on 27^th Jan 2016 as against the 65.17 lakh ha area which was sown during year 2014-15.

Thus the sown area is now just 1% below from the last year’s figure on All India basis. However, the sown area is lagging behind by 3.64% in Rajasthan which is the leading state in terms of Area and Production of Rapeseed-Mustard in India.

The Table given below has been extracted from SEA of India website.

Pest & Diseases Scenario:

Due to changes in Temperature and other weather related conditions, the advisories have been issued to state Governments and CIPMCs for continuous monitoring of Yellow Rust diseases on Wheat crop in wheat growing areas of Haryana, Punjab, Jammu & Kashmir, Himachal Pradesh, Rajasthan and Uttar Pradesh along with the monitoring of Aphids and White rust on Mustard growing areas on mustard crop.

· Incidence of white rust in mustard crop has been reported in trace to low intensity in few villages of Sriganganagar district of Rajasthan; Anand, Kheda, Baroda, Ahemadabad, Mehsana districts of Gujarat and south district of Sikkim.

Source: Crop Weather Watch Group, MoA, India, dated 25 Jan 2016.

Production Assessment:

Thus based upon the above mentioned facts and figures, we provide below the revised production estimates for the Rapeseed-Mustard crop in India for the year 2016.

These estimates can further be revised depending upon the coming weather and crop progress reports.  

Thus, due to increment in the sown area as compared to the previous report dated 24 Jan 2016, we revise upward the Rapeseed-Mustard production estimate to 54 lakh tons for year 2016.  However, this production figure is down by around 6% from the previous year figure of 57.4 lakh tons of the Oilseeds Industry estimates (Please note that the Government estimates may differ).

Long Term Price Outlook of Rapeseed-Mustard for the Year 2016

Currently Prices of Rapeseed-Mustard (RMseed) in the Indian Commodities Market are hovering around Rs. 3900/quintals.

We have a BULLISH OUTLOOK for RMSEED for the Year 2016.

However, since some upward revision in the production estimates is made, the downside risk in the price levels may be seen in the range of 3550-3650 during Feb/March period which is the main arrival period.

The ideal strategy would be to ENTER the market at RIGHT TIME.

 Judging the right price of entry seems difficult.

Ideal Buying Period/Time in the Market:

We would prefer to start buying from February First week. Then gradually make averages on weekly basis till March first week or whenever price decline in the range of 3, 6 and 8 % is seen from the first buying level of Feb first week.

The long term upward Target seems near Rs. 5300/qtl during Oct 16 to December 16 period.

(Substantial reserve capital must be kept to meet out the MTM in the volatile market and avoid over leveraging)