Castor seed prices may correct due to arrival pressure: Angel Commodities Broking
Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst- Agri Commodities, Angel Commodities Broking):
"Castor seed futures jumped 5% in last one month due to improved domestic demand from the stockists and oil mills on expectation of improved export demand for castor seed derivatives. However, earlier, the prices on National Commodities and Derivative Exchange (NCDEX), dropped to one year low in January mainly on slow down in physical demand due to wait for new season crop.
Currently, new crop has started arriving in the physical of Gujarat in limited quantities and pace of arrival is lower than the last year as farmers are slow in bringing the crop to sell.
As per Agmarknet data, castor arrivals during the current calendar year are at 62,600 tonnes, down by 18.7% compared to last year arrivals. In Gujarat, the arrivals in February have been down by about 8.3% at 33,261 tonnes.
Further, market is expecting castor seed crop higher by around 10-15 per cent over last year's production of 10.65 lakh tonnes due to higher acreage and supportive climatic conditions.
As per the data from Agriculture Ministry, Castor acreage in Gujarat recorded an increase of 5.7% at 5.96 lakh hectares as compared to 5.64 lakh hectares last year. For Rajasthan, the sastor acreage was decline by about 7% to 1.6 lakh hectares on year. The overall Castor acreage is slightly down for the country from last year.
The exports of castor derivatives have been encouraging in the FY 2017/18. The Solvent Extractors' Association of India released provisional data for India's castor oil exports for January 2018.
The exports of castor oil for first 10 months of the current fiscal started April, were 16.7% higher at 4.85 lakh tonnes compared to 4.15 lt exported last year. While castor meal exports were at 5 lakh tonnes, up by 49% compared to last year;s exports of 3.38 lakh tonnes.
However, as per the provisional export data, castor oil exports from India in January slowed down and was 1.6% lower on year and 27.2% down on month at 35,720 tonnes.
India is the world's largest producer of castor oil and cake. Rise in castor oil demand from traditional buyers, especially China, supported the overseas shipments, while Korea is the largest buyer of castor meal from India.
Going forward, castor seed prices may trade under pressure and may trade towards 4,000 levels (CMP: 4,199 per quintal) due to seasonal arrivals in the next 2-3 months. However, the prices may recover and consolidate near 4200-4400 levels if seasonal exports during the month of April and May remain high for both castor oil and meal."