Commodity Outlook – Oilseeds

India is the one of the largest producer of oilseeds in the world and the oilseed sector occupies an important position in the country’s economy. On the basis of oilseed type, the oilseeds market is segmented into groundnut, soybean, sunflower seed, cottonseed, copra, palm kernel and mustard seed. On the basis of product, the oilseeds market is segmented into edible oil and animal feed. On the basis of application, the oilseeds market is segmented into oilseed meal, and vegetable meal. Oilseed meal is further segmented into food products, feed, and industrial. Vegetable meal is further segmented into food products and industrial.

Production trend and Stock position:

  • According to Ministry of Agriculture & Farmers’ Welfare, the sowing acreage as on July 03, 2020 for Castor seed, Soybean and Groundnut had increased by 23 percent, 398 percent and 61 percent respectively compared to the corresponding period. The sowing acreage for overall oilseeds was up by 225 percent compared to the corresponding period.
  • According to government of Gujarat, the sowing acreage as on July 06, 2020 for Soybean and Groundnut had increased by 64.69 percent and 54.09 percent respectively compared to the corresponding period whereas Castor seed was down by 75.11 percent.
  • According to government of Rajasthan, the sowing acreage as on July 07, 2020 for Soybean and Groundnut had increased by 42.16 percent and 38.76 percent respectively compared to the corresponding period whereas Castor seed was down by 78.57 percent.
  • The agriculture ministry’s third advance estimate of production for the below-mentioned oilseeds (in million tonnes) was released on May 15, 2020 are as follows:
oilseeds production estimate by agriculture ministry
  • Stock positions of Castor Seed are held at National Commodity Clearing Limited (NCCL) approved warehouses at Bhabhar, Deesa, Kadi and Patan locations, Mustard Seed stocks are held at Alwar, Bikaner, Jaipur, Kota, Sriganganagar, Tonk locations and finally the Stock of Soybean are held at Akola and Latur. Below are the stock positions held at NCCL approved warehouses:
oilseeds stock positions held at NCCL warehouses
  • According to the India Meteorological Department (IMD) Second Stage Long Range Forecast for southwest monsoon season rainfall from July to September, the country will receive a normal monsoon rainfall this year. The monsoon rainfall between June to September over the country would be 102 percent of its long period average which means 88 centimeters.
mandi arrivals of castor seed in gujarat
mandi arrivals of mustard seed
mandi arrival of soyabean
mandi arrival of groundnut in kharif
mandi arrival of groundnut in rabi
price movement of castor seed in dessa, gujarat
price movement of mustard seed in jaipur, rajasthan
price movement of soyabean in indore, madhya pradesh
price movement of groundnut bold kernel in gondal, gujarat

Market commentary:

The procurement of Oilseeds at Minimum Support Price (MSP) from farmers under the Price Support Scheme (PSS) during Rabi 2020-21 season has been currently in progress from various centres in different states such as Rajasthan, Gujarat, Uttar Pradesh, Haryana, Madhya Pradesh, etc.

As on July 04, 2020 the progressive purchase of Mustard seed by NAFED under PSS from these states stood at 7.95 lakh metric tonnes (MT) with a total value of Rs. 3.52 lakh and 3,15,001 total progressive number of farmers benefited from this scheme.

According to Mustard Oil Producers Association of India the crushing of mustard seed by oilseeds crushers in India rose by 6.7 percent to 8 lakh tonnes in May, 2020 compared to 7.5 lakh tonnes during the same period last year. This shows that there is a strong demand for mustard seed and mustard oil in domestic markets.

MSP for Rabi Marketing Season 2020-21 for mustard seed was Rs. 4,425 per quintal up by 5.36 percent compared to its previous year’s price of Rs. 4,200 per quintal. Currently Mustard seed has been tradingabove the MSP levels and would trade range bound in immediate / short term.

According to Solvent Extractors Association (SEA), India’s June 2020 edible oil imports rose by 8.5 percent to 11.62 lakh tons from previous years 10.71 lakh tons.

With higher MSP for Soybean (yellow) at Rs. 3,880 compared to previous years Rs. 3,710 per quintal and forecast of normal monsoon has incentivized farmer’s intention to plant Soybean. As per the current sowing data released by the agriculture ministry where India’s total area under soybean cultivation has an increase this season, as it is a less labour intensive crop and has a considerably higher MSP, but poor demand for soymeal of Indian origin and lower than expected returns to farmers in soybean could limit the gains in the planted area. As per agriwatch website there could be further fall in soybean prices based on bearish domestic supply outlook.
For the most part of the previous year, Groundnut prices in the spot markets have hovered above the MSP of Rs. 5,090 per quintal for 2019-20. The latest MSP for Kharif Crops for Marketing season 2020-21 for Groundnut was Rs. 5,257 up by 3.28 percent. According to the recent data released by the Agriculture and Processed Food Exports Development Authority (APEDA) showed that groundnut shipments were up sharply for the year 2019-20 and its exports jumped up by 51 percent to $716 million compared to $474 million in 2018-19 on growth in volumes and pricing due to improved demand from countries such as Vietnam.
Castor seed prices are likely to trade upwards in immediate / short term because fundamentally for the current year (2020-21) the sowing acreage is estimated to be lower compared to the previous year in Gujarat and Rajasthan. Sowing has also begun in Telangana and peak sowing in Gujarat and Rajasthan is expected to pick up by July 15, 2020 onwards.

  • According to agriwatch website Castor seed sowing would be at a disadvantage during 2020-21 due to the following reasons:
  • IMD and other forecasted the monsoon during 2020 as timely and good
  • Monsoon already commenced in Gujarat on June 14, 2020
  • Pre-Monsoon rains helped early sowing
  • Water levels are high
  • Lower realization of prices by Castor farmers at the time of sowing
  • Good prices of competing crops
  • Higher MSP declared by government for food crops

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