Despite low output, castor seed prices not to rise

According to sources, farmers have a carryover stock of 400,000 tonnes, which is expected to offset the decline in production

Even as the area under castor seed declined this kharif season, industry experts expect supplies to be normal on high carryover stock. According to industry sources, farmers already have a carryover stock of about 400,000 tonnes, which is expected to offset the possible decline in production this year.

“Castor production this year is likely to be a decline as the monsoon was delayed and uneven. But there is a huge carryforward stock available at present. This means even if there is a sharp decline in production, there will not be much impact on prices as the availability of seed will not get hampered,” said B V Mehta, executive director, Solvent Extractors’ Association of India (SEA).

He declined to give estimates about the decline in production as the survey is underway by SEA-appointed agency, Neilsen. According to industry estimates, for 2012-13, it is expected that castor seed production will be 15-20 per cent lower than the production of 16.2 million tonnes in 2011-12.

Trader sources said consumption by millers will remain stable as prices have gone up in the short term and alternate oils continue to remain cheaper against castor oil.

“Currently, other oils have become cheaper, while castor prices have firmed up during the past month. But bullishness will not last long as there is limited scope for further rise in prices due to high carryforward stock,” said a trader in Ahmedabad.

In the Rajkot market, mill delivery castor prices hovered around Rs 740 per 20 kg. “We expect castor seed prices to remain at Rs 650-750 for the next few months,” said the trader.

According to a latest report by Emkay Commotrade Ltd, castor seed prices may remain firm in the near term. “We expect NCDEX castor seed prices to move up in the near months with a dip,” the report said. The firm gave a target of Rs 4,125 a quintal, Rs 4,250 and Rs 4,600 with stop loss of Rs 3,400 (daily close) on the NCDEX.

The total area sown under castor seed was 1.18 million hectares, which is 11.8 per cent less than last year’s, SEA noted in its estimates.

India is the largest producer of castor seed, accounting for more than 80 per cent of the world’s production, followed by China and Brazil. Gujarat is the top producing state contributing about 75 per cent of the total output in the country.

According to the latest SEA data, India’s total castor meal exports during April-September were reported at 214,000 tonnes, up 39 per cent from the same period last year.