The Hindu Business Line : Firm trend seen in castor oil

CASTOR oil prices during 2004 are unlikely to drop to lower levels but would remain steady and possibly follow the (strong) price tendency of other vegetable oils, Mr Vithaldas G. Udeshi, Chairman of Jayant Agro-organics Ltd, said.

Castor crop is estimated at around 7.25 lakh - 7.50 lakh tonnes this year. Export potential of castor oil is considered to be around 1.65 lakh-1.70 lakh tonnes and export of derivatives around 30,000 tonne to 35,000 tonne, said Mr Udeshi, at an international seminar on castor seed, oil and its value-added products held at Ahmedabad last Sunday. The seminar was organised by Solvent Extractors' Association of India.

In the last few years, the technical importance of castor oil as vegetable oil for industrial use has declined in developed countries such as the US and Europe, with the result that export growth has ceased and export volume is on the decline, he cautioned.

Giving an overview of the castor economy, Mr Shvetal S. Vakil, Chairman of the seminar pointed out that 2003 was a difficult year for the sector, and the industry and trade had to operate under a tough environment of low carry-over of stocks, coupled with the lowest production of castor seeds in recent years.

Castor oil prices dropped to a low of Rs 31,000 a tonne in September last year from the peak of Rs 48,700 a tonne early April, down 36 per cent. The rest of the year witnessed a 20 per cent movement between Rs 31,000 and Rs 37,500 a tonne.

He urged the Government to rationalise the tax structure and provide higher incentive for export of castor derivatives.

Taking a comprehensive view on value-addition, Mr A.K. Mitra, General Manager (Exports) of Hindustan Lever Ltd (HLL), said that value-addition could substantially improve the domestic castor industry.

Major milestones in the path to value-addition were: Improved farm productivity and delayed bean marketing; transparency in flow of information relating to demand, supply, stock levels and, consequently prices, lending much-needed stability to the market and predictability to prices.

Moving faster towards derivatives supply through R&D and superior manufacturing controls, acquiring a reliable local supplier and getting close to overseas customers were other essentials, he pointed out.

Giving production, processing, exports and stock numbers, a partner of Rajesh Brokers, trade intermediaries in castor, said that oil prices would rule firm in the coming months. A couple of international speakers emphasised the need for steady prices from India and agreed that $ 800 a tonne for castor oil would be a reasonable price.