Castor oil prices may soon see a correction on improved crop prospects, maintained the international and domestic experts at the Global Castor Conference 2011, held here on Saturday. The experts anticipate a marginal dip in the prices also due to a slowdown in demand at the peak price levels. The prices, which had touched a peak of $2800 per tonne, are expected to come down to $2000-2200 per tonne in coming months.
In the domestic markets, the castor oil prices have hit Rs 8850 per quintal, and are expected to come down to Rs 6000 per quintal gradually. The fall in the prices is expected on the robust crop outlook in the current year.
According to the latest survey by the Nielsen India, India's estimated total castor seed production for the year 2010-11 is expected to rise by 22 per cent over last year to 1.19 million tonnes. The crop acreage for castor in the country has also increased by 14 per cent against last year to 8.59 lakh hectares.
The experts from across the country as well as from overseas discussed about the need for innovation in the castor farming and processing industry, besides discussing the issues related to production and prices. "Having achieved significant progress in castor seed productivity it is essential to apply scientific innovativeness to value addition of castor oil," said Sushil Goenka, president, Solvent Extractors' Association of India (SEA).
India currently exports castor oil and derivatives worth about Rs 3000 crore ($ 650 million) per annum, while the country holds around 90 per cent share in the total castor oil and derivatives exports in the world. India exports around 360,000 tonnes of castor oil and derivatives annually.
BC Khatua chairman, FMC informed that the intermediation process in the commodities market needed to be made more cost effective and efficient. "There needs efficiency in intermediation in the commodities market to make it a win-win situation for all, exporter, trader and the farmer. Exploitation of farmers by procuring cheap commodities and selling at premium is highly condemnable," he said.
The commodities market regulator further informed that there was a need to improve physical market rather than blaming futures market for price rise. "The current physical has poor logistics, warehousing, lack of scientific management of stocks, weak transportation, which needs to be improved. Also, the current tax structure on the commodity market is divisive and destructive, to which GST is a solution. That will make the economy a single market in true sense," Khatua added.
The record high castor oil prices had raised concerns among the importing countries. "Global consumption of castor oil is expected to rise marginally in the range of 630,000-640,000 tonnes in the year 2010-11. The growth of consumption is moderate in the US and falling in Japan and South Korea. The castor production is estimated to rise to 1.5 - 1.6 million tonnes in the current year, against 1.35 million tonnes in 2009-10. The prices are artificially high and they can't stay at these high levels," said Thomas Mielke, executive director, ISTA Mielke GmbH, Germany in a video address.
Further, industry participants from India informed that castor oil prices may drop in a phased manner through next few quarters. "The prices may drop by around $ 200 per tonne every quarter till the Q4 of the current year. This may bring prices to the level of around $ 2000-2200 per tonne," said Nimish Patel, chairman of NK Industries and one of the panelists.
Gujarat tops the castor production in India with estimated production of castor seed for the current year at 8.60 lakh tonnes showing a rise of around 17 per cent over previous year. The crop is sown on 4.83 lakh hectares in the state, which is followed by Rajasthan and Andhra Pradesh.
