Rapeseed / Mustard Preparing for a Sharp Upsurge from Current Levels

Supply & Demand Scenario

India’s rape seed production in 2012-13 is estimated at around 78.20 lakh MT, up from around 66.04 lakh MT produced in 2011-12. About 62.40 per cent of the total production for the country was contributed by 2 states. The top rapeseed producing states of the country are Rajasthan (47.05 per cent) and Uttar Pradesh (15.34 per cent). Rape seed being a Rabi crop, sown during October to December is highly dependent on good monsoon. This year, good rainfall received during the current monsoon season in major producing regions will certainly provide the required soil moisture during the sowing period. The upcoming season is likely to witness a production of around 6.5 to 7.5 million MT. India holds second position in the major rape seed consumers list after China.

Global production of rapeseed in 2013-14 is projected to increase 4 percent to 63.4 million MT due to improved crops in the EU-27, Canada, Ukraine, Russia, and India. After declining in 2012/13, the growth in international trade of rapeseed could resume. Based on a 5-per cent increase in the 2013/14 area to 6.5 million hectares, EU-27 rapeseed production is projected rising to 20 million MT from 19.1 million MT last year. However, low global stocks of rapeseed are likely to persist as consumption may outpace the increase in total supplies. Even with a bigger crop, EU rapeseed imports for 2013-14 may stay level at 3.1 million MT. Additional imports would probably come from Ukraine, which is likely to support the global prices.

Price Trend Analysis & Forecast

The rape seed market price variation study indicates that the price volatility is on the rise since May 2006 owing to reports of higher seasonal demand. Looking at the seasonal trend Rapeseed prices tend to remain strong during the months of August through December amid the strong crush demand for seed during the festive season and slackening crop arrivals. European Union continues to be the major importer of RM seed and RM seed oil with an expected hike of 38.64 per cent and 14.58 per cent respectively. Thus it is expected that with the reports of shrinkage in production and enhancement of demand, the global prices of rapeseed will find increased support from the European Union in 2013. Moreover, Additional imports are likely to come from Ukraine. Based on a sharp increase in area (up 54 per cent to 1 million hectares) and low winterkill, the Ukraine rapeseed crop is expected to swell 43 per cent in 2013/14 to 2 million MT. Almost all of Ukraine’s additional rapeseed production would be used to expand exports to 1.9 million MT.

The spot prices at Jaipur are gradually moving upward due to support from the increased meal demand from the south-east Asian countries. The Indian market is expected to find support at Rs. 3200 per quintal and has good possibility of testing Rs. 4200 & 4550 in 2014 on the higher side.