Castor seed heading for first monthly loss in 5 months in October: Angel Commodities Broking

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

"Castor seed futures are trading under pressure during the current month despite reports of lower acreage, crop damage and good export figures for castor seed derivatives - Oil and meal. The most active castor futures for November delivery on National Commodities and Derivative Exchange (NCDEX) is heading for its first monthly fall in 5 months due to corrections from the higher levels as it is affecting export demand. In October, the prices have been down by 4.6% or Rs. 211 to currently trade at Rs. 4,425 per quintal.

In 2017/18, castor seed acreage in Gujarat, largest castor producing state, increase by about 6% to 5.96 lakh hectares, as per the state department figures. Thus, overall, castor acreage in the country is almost at the same level as last year.

India's castor meal exports have been encouraging this financial year as country exported about 2.86 lakh tonnes of meals during April to September as per latest data released by the Solvent Extractors' Association of India (SEA) recently. The export volume in last two months i.e. August and September increase by 196% and 68% respectively compared to last year export data. Moreover, in June 2017, country recorded highest ever single month exports at 1.19 lakh tons.

However, castor oil exports have been lower as compared to last year at 2.70 lakh tonnes during the first half of FY 2017/18. The main export destination for castor oil from the country is China followed by Netherlands, USA and France. These countries account for about 80% of total castor oil exports from the country during 2016/17.

In 2017/18, castor seed production in the country is estimated to be lowest since 2010/11 at 13. 96 lakh tonnes. According to first advance estimates of Gujarat state for 2017/18, production forecast is down by 11.5% compared to last year production.

In the last five months, castor futures have been trade higher historically in a range Rs. 4220-4660 per quintal, if compared to last five years prices due to good demand for castor derivatives. However, recent the correction in the prices is seen mainly on expectation that the exports may be slow down at higher prices.

The castor prices are expected to fall in coming weeks to encourage exports which tend to slow down during the months of Oct and Nov. We expect the prices to fall by another Rs. 200 before it make positive move during the second half of November when the availability of castor in the market weakens and the exports tends to pick up in December."

Source : Equity Bulls

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