As winter sets in, India’s mustard oilseed market finds itself at a crossroads, grappling with rising temperatures, shifting farmer preferences, and volatile global edible oil prices. Once considered the backbone of India’s edible oil production, mustard’s dominance faces stiff challenges that could reshape the market’s dynamics in 2024. Here's an in-depth look at the factors influencing this vital sector and what lies ahead.
A Fragile Recovery: Mustard Prices and Current Trends The mustard seed market has recently seen a modest recovery. Prices in Jaipur, a key market, stand at ₹6,600 per 100 kg, up 1.54% week-on-week and 0.8% month-on-month. However, they remain 7.7% below the season’s peak of ₹7,150 recorded in September.
This decline has been driven by NAFED’s strategic disposal of mustard seed stocks, which increased market supply. Yet, concerns over reduced acreage and weather-induced production losses are cushioning prices, suggesting a volatile but firm market outlook.
Meanwhile, mustard oil prices hover at around ₹1,355 per 10 kg, witnessing a moderate dip of 1.1% month-on-month. However, the ongoing wedding season—an annual demand surge—is expected to provide short-term support, keeping prices stable to firm in the near term.
The Weather Factor: Rising Temperatures Take a Toll
Weather has emerged as the single biggest disruptor for mustard cultivation in 2024. This sowing season, temperatures across Rajasthan, Madhya Pradesh, and Uttar Pradesh—India's top mustard-growing states—were 2–7°C above normal, resulting in poor germination and crop failures.
For mustard, ideal conditions include temperatures between 10–25°C and timely moderate rainfall. The hotter-than-usual October and November led many farmers to either abandon their fields or switch to alternative crops like wheat and potatoes. As a result, mustard acreage in Rajasthan has dropped by 7.2%, with the national total expected to fall by 10% compared to last year. Meanwhile, mustard output for the upcoming season may decline by 8–10% year-on-year, raising concerns about meeting domestic demand.
Farmers Shift Gears:
Despite an attractive 5.3% increase in the Minimum Support Price (MSP) for mustard, many farmers are opting for less weather-sensitive crops like wheat and potatoes.
In states like Rajasthan, Uttar Pradesh, and Gujarat, higher prices for wheat and chickpeas, coupled with mustard’s vulnerability to heat, are driving this shift. Farmers are also wary of weak price signals from competing oilseeds like soybean, which has been trading below its MSP. These factors are expected to reduce India’s mustard acreage significantly, potentially altering the supply-demand equation for edible oils.
The Ripple Effect: Edible Oil Imports on the Rise
India’s reduced mustard acreage is likely to push its already heavy reliance on edible oil imports further. The country imports 14.5–15 million tonnes of edible oils annually, including palm oil, soybean oil, and sunflower oil, to meet its growing domestic demand.
With mustard production under pressure, imports are expected to rise in 2024. However, consumers may find temporary relief as global edible oil prices are trending downwards due to abundant supplies. Prices of soybean, sunflower, and palm oil have fallen by $100 per tonne in recent weeks, potentially reducing retail prices by 8–9% by mid-December.
Global Market Trends: A Mixed Bag
Global edible oil markets are currently shaped by key developments:
- Indonesia’s biodiesel policy uncertainty has eased palm oil prices. The country’s decision to delay increasing palm oil content in biodiesel blends has reduced demand pressure.
- South America’s record soybean harvest has led to a price drop in soybean oil.
- Russia’s export duty on sunflower oil could lead to price volatility, potentially reversing the recent decline in sunflower oil prices.
Conclusion: A Market at a Crossroads India’s mustard oilseed market is undergoing a transformation. Adverse weather, changing farmer preferences, and volatile global markets are reshaping its trajectory. While the wedding season may offer short-term price support, the long-term outlook hinges on domestic production recovery and global market dynamics.
With a tighter supply-demand balance looming, India may need to ramp up edible oil imports, adding pressure to the trade deficit. For consumers, the near-term promise of lower edible oil prices provides some respite, but the sector’s challenges underscore the need for robust policy support and strategic planning.
India’s mustard story is one of resilience and adaptation—a critical chapter in the larger narrative of its agricultural economy. As the industry navigates these challenges, all eyes will be on how India balances domestic production with its growing dependence on global markets.