Mustard Update

Mustard – reports of higher sowing may pressurize price but winter demand to support prices during off

season

04th November, 2016

Mustard Update Price Performance - Monthly

• In 2016, mustard prices on futures market

started correcting after touching its highest

during the month of July due to good monsoon

across the country.

• Moreover, lower crushing demand for mustard

kept higher stock levels with the stockists

pressurize the prices during August to October

period in 2016.

2

• The production of mustard was higher at 68.21 lakh tonnes (lt) during 2015-16 compared to

previous year’s production of 62.8 lt. In 2014-15, unseasonal rains have destroyed ready to

harvest mustard crops in Rajasthan and Gujarat.

• The prices of mustard seed during the calendar 2016 was higher compared to last three

years prices due to increasing demand and lower supplies from previous year crop.

• The prices of mustard mainly depends on the production estimates, domestic crush demand

for oil and export demand for the mustard meals, which is lower in the 2016.

• Market participants are expecting a bumper crop during 2016-17 season.

3800

4000

4200

4400

4600

4800

5000

Jan-1

6

Feb-1

6

Mar-1

6

Ap

r-16

May-1

6

Jun

-16

Jul-1

6

Au

g-16

Sep-1

6

Oct-1

6

No

v-16

Source: NCDEX

Monthly Average Prices of Mustardseed (Rs/Quintal) - NCDEX

Mustard Update Price Performance - Quarterly

3

• In the domestic market, during the first

two quarters (Q1 & Q2) the prices have

been higher in 2016 compared to last

three years due to good demand for new

season crop from the stockists and oil

mills.

• The production during the previous year

(2013-14) was affected due to unseasonal

rains in the producing states of Rajasthan

and Gujarat.

• The price of Mustard seed corrected during the next 2 quarters (Q3 & Q4) due to near

normal rains in the country and good carry over stocks form last harvest with the traders.

• International canola prices (WCE canola futures) the prices have peaked during May due to

lower than expected canola planting in Canada, and regulatory changes leading European

Union rapeseed stocks to near 13-year lows. However, during Q3, the prices started to

have decreased due to higher production forecast in Canada compared to previous year.

0.14

14.31

(4.49) (1.99)

-10

-5

0

5

10

15

20

Q1 Q2 Q3 Q4*

Mustard Seed Price - Quartly Change %

* Oct 3 - Nov 3, 2016

Mustard Update High Production Estimates and Targets

4

As per estimate by the Central Organization for

Oil Industry and Trade (COOIT), the total

production of mustard seed is estimated at 58 lt,

higher by 8 lt compared to last year production,

while Department of Agriculture, GoI, estimated

68.2 lt in its fourth estimate in August 2016.

In the first advance estimate for 2016-17,

published in September, Department of

Agriculture, set a production target of 85 lt.

65.9 67.0 65.0

50.0

58.0

50

55

60

65

70

75

2011-12 2012-13 2013-14 2014-15 2015-16* F

Area and Production of Rape/Mustard seed

Production (Lakh Tonnes) Area (Lakh Hac) Source- COOIT

Rajasthan, Uttar Pradesh and Madhya Pradesh are

the top three producing states in the country.

In the coming Rabi season, the production of

Mustard is expected to increase as most parts of

North-West India and Central India have received

normal to excess rainfall during the monsoon

months (June-Sep 2016).

27.00

9.20 3.80

7.30

3.10

0.75 5.10

Production - 2015-16 (lakh tonnes)

Rajasthan

UP

MP

Haryana/Punjab

WB

Bihar/Chhattisgarh

Eastern India

Jharkhand

Gujarat

Mustard Update Brisk start to mustard sowing in Country

Mustard is the main rabi oilseed crop mainly

grown in North-west and central India. It is

normally planted in 62-65 lakh hectares. The

sowing of the crop will pick up in Nov-Dec.

As per the data release by Agricultural

Ministry, GOI, mustard acreage was higher

by more than 175 per cent at 19 lakh

hectares (lh) as on 28 October, 2016.

Currently, Rajasthan has sown about 14.8 lh

of mustard accounting for close to 78 per

cent of acreage in the country followed by

UP and MP.

5

Area under Rajasthan and UP in the end of October is almost three times the area sown a

year ago. The acreage is sharply increased this year due to normal to above normal

monsoon rains in the top growing states.

Area as on 28-Oct-16 (in Hectares)

State 2016 Current

2015 Last

% chg

Rajasthan 14,37,200 4,73,800 203.3 Uttar Pradesh 3,50,000 1,11,000 215.3 Madhya Pradesh 58,000 33,000 75.8 Assam 17,000 35,000 -51.4 Chhattisgarh 11,000 --

West Bengal 7,000 20,000 -65.0 Odisha 6,600 2,300 187.0 J&K 5,000 9,000 -44.4 Uttarakhand 5,000 5,000 0.0 Total 18,96,800 6,89,200 175.2

Mustard Update

6

Import – Export of Mustard derivatives

Mustard or rapeseed is known for its rich oil content

and one of the major vegetable oil for human

consumption. Moreover, the meal also contain high-

protein which is used for animal feed mainly in China

and Europe.

India imports the rape oil from Canada and UAE

while it exports rape meal mostly to south-east Asian

countries like South Korea, Taiwan, Vietnam,

Indonesia and Japan.

The import of mustard oil over the year increased in

the country due to cheaper availability, higher

demand and lower import duty making it cheaper to

import rather than crushing domestic mustard.

On the other hand, the rape meal export have

dropped over the year due to higher domestic

prices.

916 1,067

331 279 138

-

200

400

600

800

1,000

1,200

2013-14 2014-15 2015-16 2015-16 (Apr-Sep)

2016-17 (Apr-Sep)

Tho

usa

nd

s

Mustard Meal Exports (Tonnes) - (Apr-Sep)

Source: SEA

13

200

356 334

0

100

200

300

400

2012-13 2013-14 2014-15 2015-16 (Nov-Sep)

Tho

usa

nd

s

Mustard Oil Imports (Tonnes) - (Nov-Oct)

Source: SEA

Mustard Update Domestic Consumption and availability

7

As per USDA latest monthly report,

India's mustard seed consumption will be increased by 12.6% to 67 lakh tonnes (lt) similarly the availability is projected to remain stable at 68 lt in 2016-17.

The consumption is set to increase because

there will be jump in the availability of mustard in 2016-17.

In case of mustard oil, the consumption is going to increase by 14.3 per cent to 25.4 lt for 2016-

17 season compared to 22.2 lt last year.

The production of mustard oil in the country growing over the year. In 2016-17, domestic production will be about 21.66 lt Vs 19 lt last year. Therefore, the availability will be about

26.7 lt if we add 4 lt imports and 1 lt of carry over stocks from last year.

5,000

5,500

6,000

6,500

7,000

2014/15 2015/16 2016/17

Production & Consumption of Mustard seed in India ('000 tonnes)

Production Consumption Source: USDA

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2014/15 2015/16 2016/17

Production & Consumption of Mustard oil in India ('000 tonnes)

Production Consumption Source: USDA

Mustard Update World Rapeseed Production Forecast lower

8

As per latest USDA monthly report, world rapeseed

production in 2016/17 is forecast at 67.6 million

tons (mt), up from the September projection but

down 3% from last year production (2015/16).

The top four producing countries are European

Union, Canada, China and India. Rapeseed

production is projected to increase in Canada (0.7%)

and India (14%) while the production in EU and

China will be down by 10% and 7% respectively.

Significant decreased in production is forecasted for

European Union to 20 mt in 2016/17 is due to lower

acreage and unfavourably conditions during sowing

while China may produce about 13.5 mt.

Canada and India will produce 18.5 mt and 6.8 mt

due to favourable growing conditions and higher

acreage.

65,000

66,000

67,000

68,000

69,000

70,000

71,000

72,000

2014/15 2015/16 2016/17

World Rapeseed Production ('000 tonnes)

0

5,000

10,000

15,000

20,000

25,000

European Union

Canada China India

Top rapeseed producing Countries- '000 tonnes

2015/16 2016/17

Mustard Update Global Rapeseed Consumption and stock will decrease

9

• The latest USDA, rapeseed consumption for 2016/17

project lower by 2.7% compared to previous year

consumption. Similarly, the ending stocks too

forecasted to decline by more than 15% compared to

last year to 5.36 million tons (mt), which is lowest

stock since 2013/14 season.

• Top two consuming countries, European Union and

China, which account for more than 60% of

consumption, will consume 4.37% and 8.42 % less

rapeseed during 2016/17 season while consumption in

Canada (0.24%) and India(12.6%) will increase due to

higher production forecast.

• Ending stocks in top two producing countries -EU and

China - will decrease by 46.7% and 28.6% in 2016/17

compared to previous year while stocks are projected

to grow by 32% and 7% in India and Canada.

7,331

6,328

5,360

5,000

5,500

6,000

6,500

7,000

7,500

2014/15 2015/16 2016/17

World Rapeseed Ending Stocks ('000 tonnes)

70,754 70,489

68,600

67,500

68,000

68,500

69,000

69,500

70,000

70,500

71,000

2014/15 2015/16 2016/17

World Rapeseed Consumption ('000 tonnes)

Mustard Update Price outlook

10

• The sowing of mustard has started in the country in the states of Rajasthan, Uttar Pradesh

and Madhya Pradesh. The acreage is higher compared to last year as on October end.

• Mustard price will depend on the winter demand from the domestic market which will

trigger demand from the oil mills. The supplies will be lower during the off seasons

(November-February) as next or new season crop will be available only in March.

• During the current calendar year (2016), mustard were higher compared to last three

years because of good demand and higher consumption. The consumption of mustard

seed in the domestic market is growing in double digits since last two years.

• There is a forecast of higher production of mustard seed in 2016/17 but lower stocks and

estimates of better domestic consumption of rape meal and oil couple with higher exports

estimates of rape meal, in 2016/17 season, may support prices in long run if there is any

weather related disturbances observed during the planting and growing season.

• We expect NCDEX Mustard prices (CMP: Rs.4,650/Quintal) for December delivery to ease

a bit towards Rs. 4,410/4330 levels in case of good sowing data and adequate supplies of

mustard for winter demand otherwise may surge to Rs 4,800/5,000 levels on strong off-

season demand and dwindling supplies.

Mustard Update

Published in FY 2012. © Angel Broking 2011-12

Angel Broking All rights reserved. Corporate Office: 6th Floor, Ackruti Star, Central Road, MIDC, Andheri East, Mumbai – 400 093, India

Tel.: +(91) 022 3935 7600

The information given herein or in the accompanying material is intended only to be general information relating to the organization, structure, functions, areas of business, potential and

scope of Angel Group of companies, which expression may as the context requires include the holding company, subsidiary companies and their affiliates, or any or all of them, variously

referred to as “Angel Broking”, “Angel Group”, “Angel” or the “Group” or the “Company” and while every effort has been made to ensure the accuracy and completeness of the information

given, neither the group companies, nor any of their Directors, Members, employees, servants or agents make any guarantee or assume any liability for any errors or omissions in the

information furnished. It is further made clear that nothing stated or anything omitted to be stated in this document can constitute a ground for any claim, demand or cause of action against

the company or any of its Directors, Members, employees, servants or agents.

11

RiteshKumar Sahu

Analyst- Agri Commodities

Landline: 022 3935 8165