Short Term Note on Mustard Seed Most active ... - Karvy Comtrade

<strong>Short</strong> <strong>Term</strong> <strong>Note</strong> on Mustard Seed
Most active NCDEX December mustard seed futures have surged drastically to Rs.409
per 20 kg from Rs.350 per 20 kg, registering a growth of 16.85%.
Factors to Watch out for
‣ First and foremost thing for this surge in price is lower acreage under the crop
and depleting stocks with NAFED.
‣ As of now NAFED is holding a stock of 18 lakh tons. NAFED had a stock of 36
lakh tons of mustard seed at the beginning of the current season.
‣ Attractive prices for chana and wheat is forcing farmers to divert their mustard
lands to these crops.
‣ As a result of this area brought under mustard declined marginally by 8% to
52.37 lakh hectares from 56.76 lakh hectares planted in the same period last
year.
‣ Mustard seed sowing in Rajasthan dropped to 26.75 lakh hectares against 27.53
lakh hectares, Uttar Pradesh from 8.10 lakh hectares to 6.83 lakh hectares,
Madhya Pradesh from 7.95 lakh hectares to 5.90 lakh hectares and Haryana
from 7.05 lakh hectares to 6.10 lakh hectares.
‣ In addition to bearish fundamentals, bullish soy oil market pushing mustard
seed future prices also.
‣ These factors will support mustard seed futures to trade on higher side in the
near term.
Technical Outlook
The December contract mustard seed prices are trading at higher side at 405 levels.
Market made a life time high at 418 levels. The prices are continuously rising since 6-
weeks without much of correction and expected to go further up. Technically a Head
& Shoulder pattern formation is seen in the weekly chart which confirms the reversal
in the trend. Prices were moving in the downside after making a life time high at 418
on 9-12-2004. Technically prices should be testing 410 then 415 levels (next
resistances) in the near term after breaking the neckline at 367-370 levels.
Though prices are in the Bull Run selling may be seen around 410-415 levels as the
momentum indicators are already in the overbought phase. The weekly RSI (14) is at
0.77 and the MACD is expected to change the direction. But the volume is also rising
with respect to the price which confirms strength in the prices.

Weekly RMSEEDJPR DEC6
8/8/2004 - 5/4/2008 (BOM)
Cndl,
414.24
RMSEEDJPR DEC6, 11/26/2006, 400.1, 405.55, 400.1, 404.9
Possible target in the short term-410-415
Price
INR
Kg
400
390
380
367.37
370
360
350
340
330
322.09
320
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Vol, RMSEEDJPR DEC6, 11/26/2006, 18,370
Volume
INR
Kg
80,000
40,000
S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
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