“This year, we are looking for exports to hit 570,000 tonnes at least, due to robust demand from developed countries,” said Kanubhai Thakkar, managing director of Gokul Refoils & Solvent, one of the largest exporters of castor oil.
Castor oil and its derivatives find uses in agriculture, cosmetics, electronics & telecommunications, food, lubricants, paints, inks and adhesives, paper, perfumeries, pharmaceuticals, plastics and rubber, and textile chemicals.
Rising demand could affect availability in the Indian market due to shortage of output. India produces around 85 per cent of global castor oil. China has reportedly covered 85 per cent of its annual need of 180,000 tonnes so far. Europe and the US had also bought an estimated 85 per cent of their need of 120,000 and 60,000 tonnes by February. New season buying has also started in full swing. Demand from China, the US and EU are unlikely to pick up as they wait for arrival of the new crop and for rates to fall further. However, that from other countries is set to rise in the coming months.
Amid fear of supply shortage next year, demand from perennial buyers might also go up, said Thakkar who estimates the seed crop this year at a million tonnes. A survey by Religare Commodities says India’s castor seed output would decline 11 per cent this year to 1.2 mt, as compared to 1.35 mt last year. Sowing was lower this year by 10 per cent at 0.98 mn hectares as compared to 1.09 mn ha last year.
Hyderabad–based Trans-graph Consulting, in a separate survey, forecast India’s castor seed output at 1.04 mt, due to low crop germination on extremely high temperature.
At an oil extraction rate of 46 per cent, total seed requirement is around 1.5 mt. Assuming carryover stocks at 400,000 tonnes, demand will nullify surplus availability towards the current year-end.
Castor prices have been under pressure for several months. According to Thakkar, farmers should fetch at least Rs 4,000-4,500 a quintal to re-sow. Any realisation below that is a loss for them. Castor seed for delivery in April is trading currently at Rs 3,690 a qtl, a marginal decline of one per cent so far this month. In the spot market, the seed is selling at Rs 3,565 a qtl in Gujarat mandis. The oil is quoted at Rs 74,500 a tonne.
Abhay Udeshi, chairman of SEA Castor Seed & Oil Council, projects the castor crop potential at 2.9 mt (equivalent to 1.3 mt of oil) by 2025.