Mustard Seed: Even Hotter This Year?

Spend Matters welcomes a guest post from Robert Miles, at Mintec Ltd.

Mustard is a plant native to the temperate regions of Europe and, well known to the ancient Romans and Greeks, one of the world's first domesticated crops. It was also one of the first species actually introduced into North America by Europeans.

Three types of mustard are typically grown today: yellow (Sinapis alba), brown (Brassica juncea), and oriental (Brassica juncea). Around 700 million pounds of mustard is consumed worldwide each year. Canada is the world's largest producer of mustard seeds, with about a third of the world's current global supply.

Up until 2011, the area and volume of mustard seed had increased fairly steadily for about a decade. But good global harvests in 2009 and 2010 and a large carry over supply caused a fall in mustard seed prices, and there were reports of a reduction in the Canadian mustard sown area of about a third, which led to a smaller world crop being an increasing cause for concern. The rising price of rapeseed and increased demand for rapeseed oil, particularly for biodiesel, also caused the area sown with mustard to diminish, as farmers increasingly opted to sow rapeseed instead. Due to this lower supply, prices for some Canadian mustard seeds are now currently up by almost 40% year-on-year, and almost 75% higher on mid-2010.

Mustard seeds are also traded on the Indian commodity exchange (NCDEX). A shortage in India as a result of this year's delayed and weak monsoon has also helped to drive prices up globally. Demand for mustard seed in India usually outstrips the usual local Indian supply so India tends to act as an importer. A low domestic crop is likely to raise India's mustard seed imports and may raise world prices further this year.

Fortunately, despite this summer's drought in Southern Europe and the US, quality and quantity is generally reported to be good so far this year, with the quantity of mustard seeds from Eastern Europe is also expected to be higher.

Mustard perhaps might not to be something to be easily sneezed at once the latest harvest is in, but with demand expected to be firm, it might be an even hotter commodity later this year.

- Robert Miles, Mintec Ltd.

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