Castor prices remain high in January

Extending the upward journey, castor prices have further shot up during January amid short supply in the market. So far, the prices have surged by over Rs 880 per 100 kg in the spot markets, while taking a cue from the physical markets, the futures prices are also ruling high.

On January 1, spot castor traded at Rs 3940 per quintal, which rose by Rs 887.50 per quintal to trade at Rs 4827.50 per quintal on January 25. Similarly, the castor seed future has also shown steep rise of Rs 557 per quintal to trade at Rs 4229 per quintal on January 25 at the Rajkot Commodity Exchange (RCX). Meanwhile, on the National Commodity and Derivatives Exchange (NCDEX) the February contract of castor seed rose by Rs 666 per quintal to trade at Rs 4580 per quintal from Rs 3914 during the month.

According to industry experts, in order to meet the current demand, the arrivals need to be around 75,000-80,000 bags per day, but presently the arrivals are lower at approximately 40,000-50,000 bags per day. They further mentioned that castor crop for the previous year stood at around 9.3 lakh tonnes, while for the current year, the crop expectation is above 12 lakh tonnes, showing a growth of about 30-35 per cent.

In the wake of good demand, the industry is anticipating prices of castor seed to go up. Last year, the average price of castor seed was between Rs 30,000-33,000 per tonne. This year we expect the prices to get close to Rs 50,000 per tonne. “The main reason behind the jump in castor prices is the demand-supply mismatch. The international demand is very high, especially from China. Against it, the supply is lower," said BV Mehta, executive director of Solvent Extractors Association of India (SEA).

Raju Pobaru, president, RCX said, “Demand in spot is huge as shippers are buying to complete their export orders. But the supply is poor. The prices in futures market has increased on the back of higher spot prices. It will not come down till the spot prices decline.”  “Cold and untimely rains had affected yield of the castor crop this year. At present, lower arrivals are pushing up the castor futures and spot prices. There are no chances in the near future for prices to cool down,” said Harilal Chaganlal, a senior member of RCX.

According to industry sources, good price is benefitting the farmers and will encourage them to more grow castor. Ajay Kumar Kedia of Kedia Commodity from Mumbai said, “Overall the outlook remains firm on the back of heavy buying and a fall in the supply in physical markets. This is mainly influenced by trading sentiments.” Resistance is now likely to be seen at Rs 4642 per quintal, a move above could see prices testing Rs 4682 per quintal, he added. As per the data issued by the agriculture department of government of India, castor sowing in India increased during 2010 at 9.05 lakh hectares from previous year's 7.64 lakh hectares.