Castor seed futures on the NCDEX declined by three per cent today on account of speculation and profit-booking.

Castor seed futures for September delivery were down 3.4 per cent at Rs 4,492 a quintal while the October and November series dropped by 3.3 per cent to Rs 4,635 and Rs 4,770 respectively.

Castor seed prices had earlier declined drastically by 37 per cent during October 2011-May 2012 on account of record production that resulted in a supply glut. However, lower sowing of castor seeds coupled with firm export demand for its oil led prices to bounce back.

Acreage of castor seed as on August 9 stood around 2.75 lakh hectares, which is just 35 per cent of the total normal area. Gujarat, Andhra Pradesh and Rajasthan are the three major castor producing States accounting for around 60 per cent, 19 per cent and 14 per cent share, respectively, of total output.

India is the largest producer of castorseeds in the world and the biggest exporter of castor oil. Castor oil is used mainly to manufacture lubricants, cosmetics, synthetic nylon, specialised chemicals and pharmaceutical products.

Due to surplus production and low domestic consumption, the nation is in a position to export almost 80-85 per cent of its production in the form of castor oil. According to the Solvent Extractors’ Association of India, castor oil exports were up 17.5 per cent during the first three months of the FY 2012-13 with June witnessing a 47 per cent jump to 67,000 tonnes, compared with the same period a year ago.

In the spot market at Disa (Gujarat), castor seed was quoted at Rs 4,271 a quintal.

Lower area, coupled with robust export demand for castor oil from China and some countries from Europe, may keep castorseed prices firm. However, a sharp upside may be capped because India has sufficient stocks from last year's bumper harvest.

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