Castor Seed Turns Range Bound – Advice for Farmers & Traders

Castor Seed has been trading between 7000 and 7300 levels for the last few weeks. Buyers are getting abundant supplies from this season’s harvest these days due to which we have seen weakness in castor markets over the past 15-20 days. Prices were near the 7500 mark during the last week of the previous month, but presently the commodity trades in a moderate price band. 

Higher prices of castor seed have curbed demand from the local traders and oil millers, so there are expectations of further price correction in the near term. Lower production estimates and a thin supply pipeline have favored the upward price movement in 2021-22 and prices have appreciated by nearly 40% when compared with last year's corresponding period.

As per the SEA (Solvent Extractors Association) report, castor meal exports have increased by 40% year on year to 32000 tonnes in Feb 2022. Total exports for FY 2021/22 have fallen by around 5.5% to 3.60 LT. Last year's total exports stood at 3.90 LT. India’s castor seed production is estimated at 17.95 lakh tonnes (lt) during the current 2021-22 season, against 17.89 lakh tonnes in 2020- 21. 

Gujarat is likely to contribute 15.47 lakh tonnes to the projected production, Rajasthan 2.03 lakh tonnes, and Andhra Pradesh and Telangana 35,000 tonnes. Castor oil exports during the Apr-Feb marketing year remained at par with the last year's export volume at 6.10 lakh tonnes despite a 30% increase in export prices this season. 

Advice for Traders & Farmers: 

The demand-supply balance sheet remains bullish for castor seed from a broader perspective. The estimated consumption for 2021-2022 is around 19-20 LT. For the same period, the expected production plus the carryover inventory may be just near 20-21 LT (a tight supply situation indeed, if the estimates are in line with the actual figures). Farmers have made a good profit this year and those who are still having the stocks, are advised to wait for a further rise in prices. Because of a neck-to-neck demand-supply situation, there is a strong possibility of castor seed moving towards the 8000 mark in the next 3-4 months. In case export sales pick up, then prices may even sustain above 7500 for a longer period.

The peak supply period will continue for a few more weeks and till then, prices may go as low as Rs.6800-6850/QTL. All in all the traders and stockists can wait for a drop of Rs.150-200/QTL from current offers before going for fresh purchases.