Outlook for castor market bullish: Seminar

The domestic market is expected to continue its uptrend this year, according to the speculation made at the 4th international seminar on castor seed, castor oil and associated value-added-products in Rajkot on February 18, that the prices would rise from the current level of $650 a tonne to $700-750 by May. The event was organised by the Solvent Extractors' Association of India.

John David Marsdale of International Trading Agri Consulting, England, said, "If prices remain low for castor seed, there is a big question mark on India, as farmers here will be reluctant to sell."

Maintaining that the prices must rise to the international levels, he said, "If prices dip below 700, there will be stocking."

Alok Mitra, general manager (exports), Hindustan Lever, said the market is buyer-dominated, but it should be supplier-dominated as India is dominating the castor market.

Thomas Mielke, editor of Oil World Publications, ISTA Mielke GmbH-Germany, in a video conference said, "India should remain dominant producer/exporter of castor oil and is likely to further gain the market share."

The current prices of castor are $650 a tonne as per FOB. Europe and the US are not likely to increase their imports as their GDP growth is slow this year. China is the key for India this year for exports, said G Chandrashekhar, commodity editor of the Hindu Business Line, who was the moderator of the panel discussion on 'Castor Oil Price Outlook 2005-06'.

Talking about volatility Chandrashekhar said, "Volatility is in the very nature of this market, so cope and live with it. There is lack of conjecture to see beyond a three-month forecast in prices."

The Indian market is controlled by three-four international buyers, he said. The bio-diesel market will go high this year and, hence, exports of castor oil will shoot up, Chandrashekhar added.

Vithalbhai Udeshi, chairman of Jayant Agro-Organics, said going by the bountiful crop size in India this year, the prices are likely to reach the $750 a tonne level.

"There is a problem of proper shipment. This year, there is a steady crop here, and China is importing from India. With the US and Europe expected to follow suit, the produce is likely to go high next year by 25 per cent," he said.

T Tantiponganant, managing director of Thai Castor Oil Industries Co, Bangkok, said, "The fluctuation is not that much with castor as with other commodities. Indian farmers react quickly. In fact, they overreact, in a sense. An oversupply of 1,000-2,000 tonne, and prices went down in India. Countries such as Brazil and China keep the seeds when the markets are down."

The prices of castor oil should not exceed $750 to ensure that Brazil and China do not ship castor outside, he said.