Rapeseed Mustard Seed – Short Term Note Mustard Seed prices in Indian market have surged sharply beginning from 2007 on the backdrop of fall in production and strengthening soy oil market. Spot prices have surged from a low of Rs.370/20 kg levels to recent high of Rs.473 levels on production concern and strong demand. For 2006‐07, Central Organization for Oil Industry and Trade has pegged the country’s Mustard Seed production at 60.2 lakh tonnes against 67.7 lakh tonnes produced last year. The decline was due to reduced acreage under the crop as the area was diverted to cultivation of other Rabi crop like Wheat and Chana. National Agricultural Cooperative Marketing Federation (NAFED), nodal agency for procurement of Mustard Seed in India, procured only 21,000 tonnes of seeds against 21 lakh tonnes procured last year. All the above mentioned factors supported the rally in prices. Mustard Spot Prices in Jaipur
490
470
450
430
410
390
370
23/10/07
09/10/07
25/09/07
11/09/07
28/08/07
14/08/07
31/07/07
17/07/07
03/07/07
19/06/07
05/06/07
22/05/07
08/05/07
24/04/07
10/04/07
27/03/07
13/03/07
27/02/07
13/02/07
30/01/07
16/01/07
02/01/07
350
Present Condition and Outlook Mustard Seed is Rabi crop in India and its sowing commences from October and continues till December end. Harvesting of the crop starts from Mid February and market will the arrivals from February end. The cultivation of mustard seed depends upon the relative advantage in returns from other Rabi crops like Wheat and Chana. In order to attract more farmers to cultivate mustard seeds in the current Rabi Season, the Union Agriculture Ministry hiked the Minimum Support Price to Rs.1800 this season from Rs.1715 fixed for last Rabi season. Presently, sowing operations are in progress in major growing states. According to later crop progress report released by Agriculture Ministry, during October 1st to November 2nd period, Indian farmers have planted 1.5 million hectares of land with mustard seeds, down from 2 million tonnes sown in corresponding period last year. It is not a time to decide on production of mustard in coming season as the sowing is yet to be completed. Before actual harvest commences in India probably by February end, the produce stored in exchange warehouses is likely to be released into the market. As on 1st November, NCDEX is having 1,12,183 tonnes of the produce. Rising Oil Prices: Concern of Government… Rising edible oil prices in Indian are concern for the government and it is likely to take necessary steps to curtail price rise by means of reducing import duty on edible oils, putting ban on export of groundnut and allowing private parties to import more edible oils. All the above mentioned factors are pointing towards downward trend in Mustard Seed prices in spot as well as futures market in days ahead. Technical Outlook The December contract mustard seed prices have advanced from 420 to 492.50 levels. Prices are seems over bought and expected to take correction in the short run. The supports are seen at 467 levels and breach of the same may see further down side movement towards 450 levels. The momentum indicators are signaling prices are in overbought stage as the daily RSI (14) is at 0.68 and the MACD is diverging. If we take the retracement of the recent advance prices may take correction till 50% of the move and we may expect the correction till 467 levels. High 488.5 Low Close 466.1 Commodity 487.5 RMseed Supp2 458 Supp1 473 Pivot 481 Res1 495 Res2 503 Pivot Table Previous Week High 492.5 Low 479.5 Close Commodity 484 RMseed Supp2 472 Supp1 478 Pivot 485 Res1 491 Res2 498 Pivot Table this Week Recommendation: RMSEED –December‐ NCDEX: Sell around 485‐487 targeting 470‐67 and then 455 with stop loss above 495 Disclaimer The report contains the opinions of the author, which are not to be construed as investment advices. The author, directors and other employees of Karvy and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The above mentioned opinions are based on the information which is believed to be accurate and no assurance can be given for the accuracy of these information. There is risk of loss in trading in derivatives. The author, directors and other employees of Karvy and its affiliates cannot be held responsible for any losses in trading. Commodity derivatives trading involve substantial risk. The valuation of underlying may fluctuate, and as a result, clients may lose entire of their original investment. In no event should the content of this research report be construed as an express or an implied promise, guarantee or implication by or from Karvy Comtrade that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this report is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purpose and not to be construed as investment advices. For Detailed disclaimer please go to following URL's: http://www.karvycomtrade.com/disclaimer.asp http://www.karvycomtrade.com/riskDisclaimer.asp