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Rapeseed-Mustard seed is the second most important edible oilseed crop in India after groundnut and accounts for nearly 30% of the total oilseeds produced in the country. India is one of the largest Rapeseed-Mustard seed growing countries in the world, occupying the first position in area (28.3%) and second position in production (19.8%) after China. In the year 2004-05, Rapeseed-Mustard seed and Rapeseed-Mustard seed oilcake production was 62.5 lakh tones and 34.34 lakh tones respectively. Major states producing Rapeseed-Mustard seed are Rajasthan, Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, Gujarat and West Bengal.
Rapeseed-Mustard seed oilcake is preferred over other cakes because of its versatile uses like cattle feed, poultry feed, pig feed, aqua feed and organic fertilizer. It is considered as a potential source of protein, phenolics and glucosinolates. Rapeseed-Mustard seed oilcake is also used as fuel/biodiesel in Europe and Germany. The oil to seeds crushed and the cake to seeds crushed is 37% and 63% respectively. The average oil content in the seed is about 42% but only 37% can be recovered while crushing. The remaining 5% is left in the oilcake, which is rich in proteins and is used either as an ingredient for animal feed or sent to solvent extraction for further removal of the residual oil (5%). The total market size of Rapeseed-Mustard seed oilcake is Rs 2200 crores. With the launch of Rapeseed-Mustard seed oilcake Contract, NCDEX now will provide a window to Indian Rapeseed-Mustard seed traders, processors and exporters to hedge their price risk.
Rajasthan has the highest acreage (47%) and production (44%) in India. The major trading centres of Rapeseed-Mustard seed oilcake are Jaipur, Alwar, Sri Ganganagar, Bikaner, Kota, Bhatinda, Hapur, Kanpur and Delhi. Among trading centres Sri Ganganagar is the largest trading hub for Rapeseed-Mustard seed oilcake. Hence, the Basis centre for Rapeseed-Mustard seed oilcake is ex-warehouse Sri Ganganagar (Rajasthan), exclusive of sales tax/VAT for better price discovery. The initial contracts available for trading would be for expiry in the month of March 2006, April 2006 and May 2006.
According to the NCDEX contract specifications the quality of the Rapeseed-Mustard seed oilcake is measured on parameters like oil content, protein, fibre, moisture content and sand/silica.
Some of the major factors determining the prices of Rapeseed-Mustard seed oilcake are Rapeseed- Mustard seed production, arrival of Rapeseed-Mustard seed for crushing from the trading centers, availability as well as the relative prices of other oilseeds, oil and cake in the domestic market and demand from the cattle-feed industry.
Rapeseed-Mustard seed oilcake futures contract provide good opportunity for trading as the Annualized Volatility is 49.03 %. Apart from the rapeseed –mustard seed oilcake, NCDEX provides futures contracts in maize, yellow soybean meal, cottonseed oilcake and other commodities which are major ingredients for the livestock feed industry. This basket of commodities provide a complete solution for price risk management for animal feed manufacturers ,traders ,poultry units, milk cooperatives etc,.
Speaking on the occasion Mr. Tapan Mishra, Assistant Vice President, NCDEX said, “We already have Mustard seed as well as expeller mustard oil futures contract on the Exchange platform, with the launch of Rapeseed-Mustard seed oilcake we will be offering the market with a complete hedging solution on Mustard complex. Rapeseed-Mustard seed oilcake will be useful to millers, solvent industry and livestock feed industry.”
