Castor seed prices likely to stay firm

Castor seed prices, which have been seeing an uptrend in recent months, are expected to stay firm on a projected decline in output for the year ahead.

Castor production in the country is estimated at around 13.96-lakh tonnes, according to the first advance estimate of the government for the year 2017-18. This is, however, lower than the fourth advanced estimate of 2016-17 crop of 14.21-lakh tonnes.

Castor crop had been on a decline due to persistently lower prices since 2011-12, when production stood at 22.95-lakh tonnes, following the peak prices of ₹6,200 per quintal during 2010-11.

Market insiders maintained that carryover stock from the 2016-17 crop will be lower at around 1.5-lakh tonnes, thereby reducing the net availability of the oilseed.

“This will push up the prices from the current levels. We estimate carryover stock of about 1.5-lakh tonnes at the beginning of January 2018. And realistically speaking, the new crop will be lower than government estimates and will not cross 11-lakh tonnes,” said Manoj Agarwal, a castor trader and exporter.

The most active castor futures for November delivery on the National Commodities and Derivative Exchange (NCDEX) is heading for its first monthly fall in 5 months due to corrections from the higher levels as it is affecting export demand.

In October castor prices were down by 4.6 per cent at ₹211. It now trades at ₹4,425 per quintal. The recent correction in prices is seen mainly on expectation that exports may be slow due to higher prices.

But the price trend is expected to reverse in the next 2-3 months when it may touch around ₹5,000 per quintal on strong foreign buying amid lower crop estimates.

Exports of castor oil, the key derivative from castor seed, was reported at 44,591 tonnes in September – a tad higher than the same month of last year. For the six months – April-September – castor oil exports touched 2,70,000 tonnes, which is about 15,000 tonnes lesser than what was seen during the same period last year.

“The exports may take a halt as prices have already started firming up. But the foreign buyers can hold only till the new crop arrival starts around January-March because India is the main exporter to the world,” said Ritesh Kumar Sahu, Fundamental Analyst– Agri Commodities, Angel Commodities Broking.

The main export destination for castor oil is China, followed by Netherlands, US and France.

“These countries account for about 80 per cent of total castor oil exports from India during 2016-17. In 2017-18, castor seed production in the country is estimated to be lowest since 2010-11 at 13.96 lakh tonnes,” said Sahu.

The crop, which usually has 5-6 harvests, has an average yield of 1,263 kg per hectare nationally. “Castor prices are expected to fall in the coming weeks to encourage exports which tend to slow down during October and November. We expect the prices to fall by another ₹200 before it makes a positive move during the second half of November when the availability of castor in the market weakens and the exports tend to pick up in December,” said Sahu.

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