NCDEX Mustard Seed Future price had majorly traded higher during the last month and first week of July owing to easing lockdown situation and reports of lower production of RM Seed by 5-10% in the year 2019- 20 compared to 2018-19. In addition, farmers in various regions have been occupied with the sowing activities, which has also led to lower arrivals in the Jaipur Mandi. Furthermore, continued buying by NAFED from farmers and local mandis supported the prices eventually leading the basis (Spot - Active Futures ) to be positive and reported nearly Rs.200/quintal till 6th July. By 6th July, NCDEX Mustard Futures had closed higher by 6.31% at Rs.4779/quintal compared to Rs.4495/quintal reported on 29th May.
For the coming month, we are expecting NCDEX Mustard seed futures to trade bullish as the domestic demand for rapeseed meal is higher during this time of the year. Correspondingly, lower carry forwards stocks owing to lower production forecasts from last year (2019-20) is expected to support prices in the weaker zone. Rapeseed Mustard is selling above MSP (Rs. 4425/quintal) in the major markets and SEA of India could continue buying to support prices amid the prevailing lockdown situation. Furthermore, rapeseed oil prices could also find upside movement as well due to rising other vegetable oil prices such as Crude Palm Oil and Refined Soy Oil amid increased domestic demand and exports in the global markets. Expectancy of rise in import duties in vegetable oil prices to also support RM seed prices in the coming month. The Government of India could hike import duty on Palm Oil and other edible oils as the country seeks to become self-reliant by boosting local oilseeds production with the help of tax revenue. Overall, we expecta bullish trend in NCDEX Mustard Futures for the month ahead.
On the daily timeframe, NCDEX Mustard Seed (Aug) has been trading above its “Parabolic SAR” which indicates that the bullish trend is intact. Moreover, price has sustained above its “Ichimoku Cloud” which suggests strength in the counter. Furthermore, price has sustained above its 20*50 days “Simple Moving Average”, which confirms bullish control. Additionally, momentum indicator RSI (14) has sustained above its 50 level which confirms positive momentum in the counter. So, based on the above technical structure one can initiate a long position in NCDEX Mustard Seed (Aug) future at CMP 4750 or a fall in the prices till 4680 levels can be used as a buying opportunity for the upside target of 5150. However, the bullish view will be negated if NCDEX Mustard Seed (Aug) closes below the support of 4550.
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