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Castor Prices surge on higher exports, crop damage: Angel Commodities Broking

Posted On: 2017-08-10 21:01:58

Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):

"Castor seed futures on National Commodities and Derivatives Exchange (NCDEX) has seen highest single day jump since March this year supported by highest ever monthly export volume of castor meal and reports of crop damage due to heavy rains in Gujarat. The benchmark castor seed contract on NCDEX for September delivery was up more than 3.21 % or Rs. 147 today to trade at Rs. 4,727 per quintal, its highest level in four and half months.

Higher castor meal exports

India's castor meal exports in June was revised to 1,19,315 tonnes from 62,516 tonnes in data released by the Solvent Extractors' Association of India (SEA) recently. The export volume for July was not updated in the recent release by SEA but the exports are expected to be good. The revised export data for castor meal in June is highest ever recorded for a single month. In June last year, India had exported 40,591 tonnes of castor meals. For Apr-Jun, exports of castor meal were at 1,49,881 tonnes, significantly higher than 80,808 tonnes during the same period in the previous year. South Korea was the major importer of Indian castor meals, followed by Taiwan and Singapore during this period.

Damage due to heavy rains and higher acreage

During last week of July, heavy and incessant rains triggered flooding and water logging in Banaskantha and Surendranagar has hit castor crops in the region. Gujarat and Rajasthan account for more than 82% of castor area in the country. The castor acreage in Gujarat increase manifold till the end of July due to easy availability of hybrid seeds in the beginning of the season.

As per the data from Ministry, castor acreage in Gujarat increase by 279% till Aug 4, 2017 to 1.44 lakh hectares as compared to 38,000 hectares last year till first week of August while Rajasthan recorded a jump of 133% in area to 66,200 hectares.

Lower production forecast last year

During last year (2016/17), castor seed production in the country was lower 25% because of lower acreage in Gujarat. In its 4th round estimate, SEA has revised down its castor seed production estimate to 10.61 lakh tonnes (lt) compared to 14.23 lt in 2015/16.

Outlook

Castor seed futures traded closed to Rs. 5,000 per quintal in April and then is corrected about Rs. 875 or 21% to Rs. 4,124 per quintal in two months in June due to lower demand for castor meal. In April, India exported only 11,425 tonnes of castor meal, down by about 70% compared to 37,785 tonnes in previous year in April. Due to lower prices, the arrivals of castor in the physical market started to decline during June and July as farmers try to hold castor on anticipation of good price realisation in coming months. Now, due to expectation of good exports for castor meal and oil, the oil mills may procure castor seed more aggressively during the coming months as new crop will only arrive in December. We expect the prices to stay higher and may cross Rs. 5,000 per quintal in coming weeks amid good physical demand coupled lower stocks with the farmers and stockists due to lower production last year."


Source: Equity Bulls

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