'Export demand for castor to increase despite higher prices'
Currently, castor seed price in the physical market is 38 percent higher on year according to weekly data published by Solvent Extractors Association of India (SEA). The castor seed price in Gujarat is 56,150 rupees per ton against 40,664 during the same period last year.
In the futures market, due to a slow start to castor sowing in Gujarat, the prices have surged from the low of Rs 3,831 per 100 kg in June last year to an all-time high of Rs 6,300 in November.
However, it corrected to Rs 4,900 in December as the acreage eventually improved as prices touched all-time high during the sowing season. In 2019, castor seed prices remain above Rs 5,000 despite a drop in export volume of castor oil and meals.
In the current season, the demand for castor seed from oil mills is higher as the output is expected to be lower this year amid less acreage and lower yield due to uneven rains last year.
According to the state agriculture department, castor seed acreage in the last two years is lowest since 2009-10 mainly on lower price realisation by farmers during recent years.
The export of castor oil and meal increased in 2017-18 but volume was down in 2018-19 as export prices increased considerably. According to Solvent Extractors Association (SEA), the total production in India in 2018-19 was estimated to be down by 21.4 percent to 11.3 lakh tonne in 2018- 19 from 14.3 lakh tonnes, estimated in 2017-18.
As per SEA, castor meal exports were at 53,591 tonne, up 210.6 percent compared to the same month last year. Last year, the exports were only 17,250 tonne for the same month. In 2018-19, castor meal exports were about 3.76 lakh tonne, down 34.4 percent YoY. Exports were lower due to higher prices of castor meal during the last year by an average of about 15 percent at $81 per ton against $70.6 in the previous year.
As per SEA, India's castor oil exports jumped 30 percent on month to 50,956 tonne in March but was down 16.2 percent YoY. Last year, the country exported 60,776 tonne of castor oil in March. Overall, castor oil exports during FY19 was down 16.7 percent to 5.43 lakh tonne compared to 6.51 lakh tonne in the previous year.
The average export prices of castor oil during the last six months is higher at Rs 1,05,915 per tonne compared to Rs 94, 263 during the same time previous year.
Castor price increased gradually since February affecting export demand for castor oil and meal. However, with reports of lower production this season, the importers are not expecting any corrections in price in coming months and may move on with their requirements.
Compared to last year, castor oil exports jumped 30 percent on month in March while meal exports increased over 200 percent in April. As India is the largest producer of castor, it accounts for about 80 percent of total world production. A majority of exports happen during March–June period when the prices are lowest due to heavy seasonal arrivals.
Going forward, castor seed availability will be diminishing as the season progresses and the export demand for castor meal and oil is going to increase despite higher prices. We expect the castor seed prices to cross Rs 6,000 per 100 kg in the 1-2 month period.
Source :- Moneycontrol.com