Castor seed prices have been ruling higher for the larger part of this year. Prices were seen cooling off in the past few weeks and the fresh crop arrivals would further put pressure on the prices till December.
Falling production year-after-year and lower estimates for the current season have seen castor seed prices moving up during a large part of the year. Prices, which were trading around Rs 3,000-Rs 3400 a quintal in 2016, have been largely above Rs 4,000 a quintal this year. In April, castor had even moved up to Rs 5,000 a quintal on lower production estimates.
According to government estimates, in 2017-18 castor seed production will be the lowest since 2010-11 at 1.396 million tonnes. In 2016-17, the production was 1.421 million tonnes. In the previous two years it was 1.7 million tonnes and 1.817 million tonnes.
“Castor production has been falling due to the reduction in acreage year-after-year. Farmers have been shifting to cotton, RM seeds, soybean and other pulses,” said Ritesh Kumar Sahu, fundamental analyst, agri commodities, Angel Commodities.
This crop year, however, the acreage was almost same as last year. Castor seed acreage in the largest producing state Gujarat increased by about 6 per cent to 596,000 hectares. This compensated for the reduction in acreage in other states. But the production was hit by higher rainfall in Gujarat and Rajasthan during the sowing season.
On the demand side, exports of castor oil have been down due to higher prices. Between April and September, castor oil exports have come down 5.5 per cent to 270,000 tonnes.
“Castor oil exports have been lower this year because the prices were too high and reached more than $1,600 per tonne in May-June compared with $1,000 per tonne last year. Prices have cooled to $1,470 per tonne,” said Sahu.
The main export destination for castor oil is China followed by the Netherlands, the USA and France. These countries account for about 80 per cent of total castor oil exports from the country during 2016-17.
However, the price of castor meal has been down to $63 per tonne during April-June compared with $73 last year. This saw the export of meal going up.
This financial year the country exported 286,000 tonnes of meals during April-September, as per latest data released by the Solvent Extractors' Association of India (SEA) recently. The export volume in last two months – August and September – increased by 196 per cent and 68 per cent, respectively, compared with last year. Moreover, in June, the country recorded highest ever-single month exports at 119,000 tonnes, he said.
Since October, castor seed prices have been falling ahead of the arrival of the new crop in the market. Prices are currently ruling around Rs 4,300 a quintal and a dip towards Rs 4,200 a quintal cannot be dismissed by November-December. “The most active castor futures for November delivery on National Commodities and Derivative Exchange (NCDEX) saw its first monthly fall in 5 months due to corrections from the higher levels. In October, the prices have been down by more than 5 per cent,” said Sahu.
“The castor prices are expected to fall in coming weeks to encourage exports, which tend to slow down during October and November. We expect the prices to fall to Rs 4,200 a quintal before it make positive move by December when the availability of castor in the market weakens and the exports tend to pick up,” added Sahu.