Traders wary of virus fears bringing down castor oil exports to China

The rapidly spreading coronavirus is set to dent India’s castor oil exports as uncertainty looms large over Chinese purchases in the backdrop of the coronavirus outbreak.

Industry experts have expressed fears of continued dip in castor oil exports this year. During the last calendar year, India’s castor oil and derivatives exports were hit by economic weakness in China, causing a decline in exports to the tune of about 9 per cent over 2018.

Export revenues

“China slowdown resulted in our exports to that nation plummeting nearly 16 per cent (in 2019). With coronavirus hitting China, we are not sure how things would pan out this year. In value terms, castor oil and derivatives contribute about $1.4 billion or about ₹10,000 crore to India’s export revenues,” said Atul Chaturvedi, President of Solvent Extractors' Association of India (SEA), while addressing the 18th Global Castor Conference in Ahemdabad recently.

Sharing an overview on the global castor oil industry, Abhay Udeshi, Chairman, SEA Castor Seed & Oil Council, said that approximately 45 per cent of India’s castor oil was exported to China.

Udeshi said: “On the fundamental side, exports of castor oil in 2019 were at 5,50,000 tonnes as against 5,93,000 tonnes in 2018. The total consumption after accounting for domestic and derivatives demand was at about 760,000 tonnes against 790,000 tonnes in the previous year. The current projections for demand remain uncertain as the impact of the coronavirus on global economy, particularly China, is not yet clear.”

Traders believe that amid slowing Chinese and Indian economies, coupled with a low visibility of growth in the US and Europe, the demand for castor oil is likely to remain low in the near future.

Record output

SEA also released a castor crop survey for 2019-20, which estimated a record castorseed output in India at 2.04 million tonnes, which is a little less than double from 1.08 million tonnes in the revised estimate for 2018-19. The survey was commissioned by SEA to agri research agency Agriwatch, which conducted field surveys and remote sensing data analysis.

The survey revealed that the overall castorseed yield will be higher by about 46 per cent from 1,407 kg per hectare in 2018-19 to estimated 2,052 kg per hectare in 2019-20.

Also, there is a reported surge in the castor acreage at 9,92,000 hectares for 2019-20, as against 7,70,000 hectares last year.

Gujarat is set to witness more than double the castorseed production at 1.74 lakh tonnes for the year under review as against 8,89,000 tonnes reported last year. The increase in output is attributed to increased average yield of 2355 kg per hectare for 2019-20, up 41 per cent from 1,666 kg per hectare last year. The seed arrivals haven’t started yet in markets due to delayed sowing.

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