Castor seed prices trade lower on dull China demand

AHMEDABAD: Low demand by China and Europe has led to a bearish trend in castor seed prices. Futures too are weak with an expectation of higher supplies to spot markets in March and April. On the NCDEX, the oilseed for January delivery declined by 3.4% to Rs 3,727 a quintal, while the February series shed 3.6% to Rs 3,811 a quintal.

Castor oil, extracted from castor seed, and its derivatives have varied applications in the manufacturing of soaps, lubricants, hydraulic and brake fluids, paints, dyes, coatings, inks, cold resistant plastics, waxes and polishes, nylon, pharmaceuticals and perfumes.

"Currently, demand is dull in China and Europe. It's early to say how the export position will be in the coming days," said Atul Chaturvedi, CEO of Adani Wilmar, who added that the current prices were reasonable. Currently, castor seed supplies to Gujarat markets was at 15,000 bags of 75 kg each. The non-edible oilseed crop is sown in July-August and harvested December onwards till March with an average 46% oil recovery.

Current export contracts were being signed at $1,400 to $1,450 a tonne. "Export demand took off a week ago. China, Europe, Japan and US buyers know that the Indian crop is good. Hence, buying is according to their need," said Kanubhai Thakkar, MD of Gokul Refoils And Solvent. According to him, castor production this year was pegged at 13-14 lakh tonne with a carryover stock of 4.5 to 6 lakh tonne. In terms of castor oil, production was expected to be 5.5 lakh tonne. The company processes 1.5 to 1.75 lakh tonne castor oil annually.

India is the biggest exporter of castor oil, holding about 70% share of international trade. Major buying is done by China which manufactures sebacic acid to be sold to the rest of the world. In the domestic market, castor oil is being sold at Rs 8,000 per quintal and is largely being bought by paint and lubricant manufacturers.

In Gujarat, the chief producing state of castor having a share of 86% of domestic production followed by Andhra Pradesh and Rajasthan, seed prices were ruling at Rs 3,750 per quintal on December 24 with exporters and domestic buyers making purchases. "All major exporters are buying castor seed. Hedgers are taking short positions whereas traders who are bullish are taking buying positions," said Manoj Aggarwal of Kedar Nath Agri Trading firm in Palanpur market.