RM Seed (rapeseed-mustard) was the market mover in the agri commodity space in the past week. The RM Seed futures contract on the NCDEX traded negative during the week and closed down 3 per cent (year-on-year). The most active January contract touched a six-month low of ₹4,431 per quintal on extended selling pressure. Improvement in the rabi sowing of mustard seed across major producing States was one of the factors that led to this sharp fall in prices. As on December 16, 65.52 lakh hectares of area was covered under mustard seed cultivation against 59.71 lakh hectares planted in the same period a year ago.. However, the weather conditions that will prevail until the end of January may play a crucial role in crop yield.

The negative crush margin along with lack of strong end-user demand has further added to the bearishness in prices. Slack demand from upcountry buyers amid moderately higher supplies pushed down prices of RM Seed futures, during the week. Anticipation of a further fall in prices ahead of the new season is forcing stockists to release their stocks in the spot markets. Demand shift from consumers to alternate edible oils like soya oil and palm oil is also weighing on mustard seed prices. Going foward, RM Seed futures contract may recover in the earlier part of the week.

However, such a recovery could be short-lived and the contract may resume its downtrend on the back of bearish fundamental factors. Overall, the outlook is expected to remain bearish for the week.

The writer is Head-Commodity Research, Karvy Comtrade

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