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Suresh P. Iyengar

Mumbai, Sept. 14 Castor seed futures on the NCDEX may trade higher in the short term (two months) due to shrinking arrivals and low carry-forward stocks.

However, prices may decline once the arrivals begin in December.

Moreover, the area under castor cultivation has dipped nine per cent to 5.81 lakh hectares till August-end against 6.4 lakh hectares in the same period last year, according to Agriculture Department. Normally, it is sown in 7.01 lakh hectares.

Sowing was delayed in the early monsoon season due to insufficient rains, especially in Andhra Pradesh and Gujarat.

Gujarat is the largest producer with a production of 6.5 lakh tonnes in 2007-08 and a major hub for the castor seed industry.

Sowing was lagging by nearly 80 per cent during the early monsoon season, but later picked up in July-August. The final output will depend on the progress of rains in the coming weeks. The arrivals of fresh crop produce will start from November and extend till April. Carry-forward stocks were negligible due to low output last year and good export demand.

The area under castor cultivation has almost stagnated in the last few years; however, yields have increased due to favourable weather condition. Yields hit a record high of 1,216 kg a hectare in 2007-08 with output touching the second highest level of 9.1 lakh even as area under cultivation remained almost unchanged. Good irrigation facilities and timely rains in Gujarat in kharif 2007 led to a bumper production.

Global castor seed production has been almost stagnant at about 10-14 lakh tonnes in the last 7-8 years. The output touched an all-time high of 15 lakh tonnes in 2005 as production significantly increased in India.

The castor seed output has been steady at about 12 lakh tonnes in the last two years. The production marginally increased to 12.1 lakh tonnes last year due to higher output in India (9.1 lakh tonnes). India is the largest producer and constitutes about 64 per cent of the global production. Any changes in area and yield in India has a major impact on global castor output.

India exported about 1.76 lakh tonnes of castor seed oil in 2007-08 against 1.9 lakh tonnes last year.

However, the exports demand may slowdown as China, one of the largest buyer of castor oil from India, is set to reap a rich harvest this year on favourable weather condition.

Exports are likely to benefit from the recent rupee depreciation. Rupee has depreciated sharply in the past few weeks and fell below Rs 45 against dollar.

More Stories on : Oilseeds & Edible Oil

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