Castor seed price falls 17% in 6 weeks

Arrival of the new-season crop and weak demand for its derivatives from markets abroad are the reasons

Castor seed prices have fallen 17 per cent in about six weeks due to arrival of the new-season crop and weak demand for its derivatives from markets abroad.

The oilseed trades at Rs 3,911 a quintal in the Gujarat spot market, from Rs 4,728 a qtl on January 1. In the futures market, the price has dropped 23 per cent in the period.

Used through its derivatives form in the lubricants and paints industries, India enjoys output primacy in the world, with annual estimated production of 1.5-1.6 million tonnes. A recent estimate by the Central Organisation for Oil Industry & Trade, the industry association, estimated the current seed output at 1.1 mt, a wide difference from the government’s First Advanced Estimate of 1.96 mt. “Over a month of delayed sowing due to the proportionate delay in monsoon rain last season is likely to hit yield this year,” said Dilip Kumar, president of the Castor Development and Export Promotion Council.

He thinks the price will rebound in a couple of months to Rs 5,000 a qtl, following refilling of domestic and export pipelines.

India produces 700,000-800,000 tonnes of castor derivatives in the form of oil, mostly for export. Domestic use is negligible. Traders estimate total arrival at 2,600 tonnes in the spot markets, around 25 per cent lower than the same time last year.

“The government’s production estimate is based on an average yield in Gujarat at 1,150 kg per hectare, which is unlikely,” said Ritesh Kumar Sahu, an analyst with Angel Commodities Broking. The report estimates world production at 1.53 mt for 2014-15.