Castorseed price has been in a free fall since the beginning of 2015. The castor seed futures contract traded on the National Commodity and Derivatives Exchange Ltd (NCDEX) is down over 20 per cent since the beginning of this year. It is currently trading at ₹3,930 a quintal. Weak domestic as well as export demand has pulled the castorseed spot price lower. This has triggered profit booking by traders, especially since the contract had rallied 12 per cent last December. The bearish outlook remains intact. Short-term traders can use this opportunity to initiate fresh short-position.

Short-term view: The short-term view is bearish. The contract has declined below the psychological support at ₹4,000 this week. Key short-term resistances are at ₹4,013 – the 200-week moving average and then at ₹4,100 – a trend line resistance. Immediate support is at ₹3,850. A break below this level can drag the contract lower to ₹3,750 and even ₹3,600 in the coming weeks.

Traders with a short-term perspective can go short in this contract at current levels. Stop-loss can be placed at ₹4,060 for the target of ₹3,750. Intermediate rallies to ₹4,000 if seen can be considered to accumulate more short positions.

The downside pressure on the castorseed futures contract will ease only if the contract rises past ₹4,000.

The short-term outlook will turn positive if the contract breaches ₹4,100. Such a break can then take the contract higher to ₹4,300.

Medium-term view: The medium-term trend is down. But this downtrend could be nearing a bottom. There is a strong trend line support at ₹3,650 which could halt the current fall. A strong reversal from here will have the potential to breach the psychological hurdle at ₹4,000 and take the NCDEX-castorseed futures contract higher to ₹4,500 levels. On the other hand, a fall below ₹3,650 could add more pressure on the contract. It will then increase the danger of the fall extending towards ₹3,350.

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