Domestic factors coupled with the sharp rally in international prices saw oilseeds and edible oils turn as top performing agri commodities in 2020.
Mustard seed, soybean, crude palm oil (CPO) and refined soya oil have outperformed all items in the agri commodity basket.
Speaking to BusinessLine, Biren Vakil of Paradigm Commodity Advisors, said that international developments influenced the oilseed prices. “Brazil and Argentina faced La Nina effect which hit their soyabean crop. Russia and Ukraine market had one of the bad sunflower crops in recent years. Europe faced drought which hurt mustard cultivation. So in the global market, there was a bull run in oilseeds including soybean, sunflower etc.”
Vakil added that the domestic rally in oilseeds prices is a reflection of the global factors.
Price data showed CPO futures quoted at ₹945 per unit of 10 kg, up about 26 per cent from the same time last year. However, CPO prices had a phenomenal rally of about 68 per cent from the lows of ₹560 earlier in 2020.
“In March 2020, due to Covid-19 lockdown in many countries, crude prices turned negative, which caused CPO to hit ₹567. But from May onwards, we saw unlock happening and prices started recovering from the lows,” Ajay Kedia, Director of Mumbai-based Kedia Commodity told BusinessLine adding that CPO prices are getting closer to the highest levels since 2011 due to current fundamentals.
Clearly, a rally in CPO — the cheapest of the edible oil complex — also spilled over to the other edible oils and oilseeds, including mustard and soybean.
Jagdeep Garewal, Director at Sethji Broking House in Ahmedabad stated that among the oilseeds, mustard was the lead performer for two reasons – Covid-induced demand in the local markets and the global rally in the prices.
“Higher demand for pure food has spiked the prices. Also, government’s ban on blending in edible mustard oil has further pushed up its consumption fuelling the prices further,” Garewal said. Mustard futures on NCDEX touched a high of ₹6,000 a quintal during October 2020, however it corrected from its peak levels on brightened sowing prospects. Strong fundamentals driven by retail demand capped the price fall as mustard futures on NCDEX quoted at ₹5,635 per quintal on Wednesday.
Kedia stated that soybean futures, which quoted around ₹4,400 a quintal in December 2019, fell to ₹3,200 due to demand destruction in poultry sector due to lockdown. But with unlock measures, the prices returned to its ₹4,400 levels in recent trades. Refined soya oil futures gained about 24 per cent on year-on-year basis to ₹1,134 per 10 kg.
This article is auto-generated by Algorithm Source: www.thehindubusinessline.com