Chana, mustard likely to trade around MSP, wheat much above it

Wheat is expected to trade much above its minimum support price (MSP) owing to strong demand while prices of chana and mustard might remain under pressure and closer to their MSPs, according to traders.

A more than anticipated rise in prices of rabi crops, mainly in cereals, pulses, and oilseeds, over their thresholds could make the government’s task of inflation control complicated and challenging.

Mustard

Mustard is the most widely grown oilseed during the rabi season, and this year, farmers have planted the crop in around 9.8 million hectares, which is 7.46 per cent more than last year’s.

“If everything goes well, we expect the mustard crop size to be around 12 million tonnes as against last year’s 11 million tonnes while the carry-forward stocks are estimated to be 2.2-2.5 million tonnes,” Tarun Satsangi, assistant general manager (commodity research), Origo Commodities, told Business Standard.

He said the new mustard crop had started arriving in some markets, and this would gain steam by the end of the month.

“Mustard seed prices have declined 5.6 per cent this month so far after coming down 6.75 per cent in January and are trading at a 22-month low of Rs 5,900 per quintal. Higher carryover stocks, coupled with record production, will drag the prices further down to Rs 5,500,” Satsangi said.

The MSP of mustard for 2023-24 is Rs 5,450 per quintal.

Rahul Chauhan, commodity analyst at iGrain India, said that mustard seed prices would hover around the MSP this year and traders should not expect a rally in prices similar to last year.

Chana (gram)

Chana has been sown in around 11.2 million hectares this year, marginally down as compared to last year.

Chauhan said if prices remained below the MSP of Rs 5,335 per quintal when the new crop arrived in full steam, the government might have to intervene to prop up sentiment.

“There might be a momentary uptick in prices before the arrival of the new crop in the next few days, but the upside will be very limited,” Chauhan said.

Satsangi said as the weather was favourable for chana this year, production could be 13-1.5 million tonnes, around 8 per cent lower than last year’s.

He said the low crop size might not fuel any rally because of good carry-forward stocks with the government and traders. “Supplies will increase in 15-20 days. And during the peak arrival season, prices may touch Rs 4,200-4,400 per quintal before hitting the bottom,” he said.

Wheat

Among rabi crops, wheat is perhaps the most important and its price trends will be followed owing to its impact on inflation, the Centre’s annual procurement, and the progress of the revamped Pradhan Mantri Gareeb Kalyan Ann Yojana.

Satsangi expects wheat production to be 110-112 million tonnes this year if the weather remains favourable in the next few weeks and there is no unusual rise in temperatures like last year.

Last year, according to his estimate, production was around 97 million tonnes though officially it was 106 million tonnes.

“Temperatures play a crucial role in the wheat crop during the critical growth stage. The new crop has started hitting some mandis in Gujarat, Madhya Pradesh, Maharashtra, and Rajasthan, and is trading at Rs 2,500-2,900 per quintal. Prices will soften when arrivals pick up and we expect it to be quoted at around Rs 2,400 per quintal,” Satsangi said.

Chauhan said regardless of the level of production of wheat this year, whatever farmers brought to the market would be sold immediately and Centre might struggle to refill its inventories unless it announced a bonus over the MSP of Rs 2,125 per quintal.

Indian players don't expect unusual export curb on Indonesian palm oil

The Indian edible oil industry is confident that Indonesia, which is the world's largest producer, won't impose any unusual export controls to cool down domestic production as it had done in the past.

"There is no official information of any export curb but even if it happens, it won't be outright ban like last year as Indonesian producers know how badly they suffered due to the ban," said B V Mehta, executive director of Solvent Extractors Association said. 

Mehta was reacting to reports that Indonesia might impose some export curbs on palm oil to cool down domestic prices ahead of Ramadan that starts next month.