Mustard is used in several forms in cooking: whole seeds, dry and prepared.
Whole seeds. There are just two types of mustard seeds produced commercially, brown and yellow. Canada is the world's leading grower and exporter. Most mustard seeds sold in supermarkets are the yellow variety, but you can get the smaller brown seeds from specialty stores. Most prepared mustard is made from these two seeds. In cooking, to release their flavor, whole seeds are typically crushed or heated in oil until they pop. Mustard seeds can be stored indefinitely in a cool, dry place.
Dry mustard. This is nothing more than the ground powder of yellow or brown mustard seeds. Most commercial dry mustard comes from yellow seeds. There is actually very little difference between pure dry mustards.
Prepared mustard. The preparation and added ingredients give a mustard its character. Most cooks are familiar with the yellow ballpark mustard (which gets its color from turmeric and not mustard) and the Americanized version of French Dijon mustard. But there are many other varieties, from garlic mustard to raspberry mustard to curry mustard.
Prepared mustards are made by reconstituting mustard powder or pulverizing seeds, then adding flavors and sometimes color. In some parts of the world, prepared mustard is made fresh by home cooks.
Cooking. Mustard's pungency comes from an essential oil that forms when ground seeds are mixed with cold water. Heat and strong acid diminish and can even destroy the developing mustard enzyme, so avoid cooking dry mustard or pulverized seeds for long periods of time. Either mix with cold water and let stand for at least 10 minutes before using as a prepared mustard, or add to a recipe near the end of the cooking time, and avoid adding with acids.
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