 "Bulls tighten grip on castor seed")
Castor seed has witnessed a sharp bull run so far this year, on a lower output estimate following a delay of over a month in monsoon rain which had resulted in less of sowing. Prices have run up 17% in six months.
A pre-season output forecast by research firm Agriwatch showed castor output at 1.55 million tonnes this year after a record 1.83 MT the previous year. Trade sources, however, put the figure at 1-1.1 MT, a multi year low.
Sanjiv Sawla, managing director of M Lakshamsi & Co, a city-based trader and exporter, said speculators had taken full control of the seed market, as they did in the past on other commodities like guar gum, seed and chana. Data for castor seed spot prices compiled by National Commodity & Derivatives Exchange (NCDEX), show it is 21% up from June and trading at Rs 4,724 a quintal at the Deesa mandi in Gujarat's Banskantha district. Castor seeds' share in overall volumes on the NCDEX rose to 26% in October, from 23.5% in September.
Castor seed prices had been subdued for 10 months on surplus supply. Not any more and most processors and their importer counterparts don't seem well covered. Mandi arrivals have dried, despite a surge in prices. It does augurs well for growers, shortchanged for a long while despite the monopoly India enjoys in this commodity.
"Fresh international demand from buyers from China and Europe is seen during the past few weeks. The pipeline for importers in these countries has dried to a negligible quantity. The next two months are the most crucial demand months. We don't see any price correction, at least in the near future. With almost zero carryover this year and late expected harvested arrival, the pressure is bound to sustain in the market and prices are expected to rally," said Manoj Kasliwal, managing director of Pumarth Commodities.
Castor seed is now trading at a premium of 3.3% for delivery in March 2015, a wonderful opportunity for arbitrageurs and hedgers to buy short and sell long. On the NCDEX, castor seed is quoted at Rs 4,656 a quintal for delivery in December, sowing thereby a gain of around 15% since September 15. For delivery in March 2015, it is traded at Rs 4,810 a quintal.
Both volume and open interest (unsquared positions) have surged. Trading volume has jumped 14 times to 7,1640 lots and OI was up over four times to 295,570 tonnes on Monday from 61,220 tonnes on September 15.
Derivatives of castor seed, castor meal and oil have also witnessed a sharp rise in prices. Castor meal jumped by 24% to Rs 7,500 a quintal and castor oil rose 19% to $1,515 a tonne so far this year.
A pre-season output forecast by research firm Agriwatch showed castor output at 1.55 million tonnes this year after a record 1.83 MT the previous year. Trade sources, however, put the figure at 1-1.1 MT, a multi year low.
Sanjiv Sawla, managing director of M Lakshamsi & Co, a city-based trader and exporter, said speculators had taken full control of the seed market, as they did in the past on other commodities like guar gum, seed and chana. Data for castor seed spot prices compiled by National Commodity & Derivatives Exchange (NCDEX), show it is 21% up from June and trading at Rs 4,724 a quintal at the Deesa mandi in Gujarat's Banskantha district. Castor seeds' share in overall volumes on the NCDEX rose to 26% in October, from 23.5% in September.
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"We see its fair price around Rs 1,440 a maund (20 kg, which translates into Rs 7,200 a quintal), which would go a long way in improving the economics of this crop, add to the country's needed forex earnings, without affecting in any way the trade/export potential," said Maganbhai Patel, president (Gujarat region), Bhartiya Kisan Sangh.
Castor seed prices had been subdued for 10 months on surplus supply. Not any more and most processors and their importer counterparts don't seem well covered. Mandi arrivals have dried, despite a surge in prices. It does augurs well for growers, shortchanged for a long while despite the monopoly India enjoys in this commodity.
"Fresh international demand from buyers from China and Europe is seen during the past few weeks. The pipeline for importers in these countries has dried to a negligible quantity. The next two months are the most crucial demand months. We don't see any price correction, at least in the near future. With almost zero carryover this year and late expected harvested arrival, the pressure is bound to sustain in the market and prices are expected to rally," said Manoj Kasliwal, managing director of Pumarth Commodities.
Castor seed is now trading at a premium of 3.3% for delivery in March 2015, a wonderful opportunity for arbitrageurs and hedgers to buy short and sell long. On the NCDEX, castor seed is quoted at Rs 4,656 a quintal for delivery in December, sowing thereby a gain of around 15% since September 15. For delivery in March 2015, it is traded at Rs 4,810 a quintal.
Both volume and open interest (unsquared positions) have surged. Trading volume has jumped 14 times to 7,1640 lots and OI was up over four times to 295,570 tonnes on Monday from 61,220 tonnes on September 15.
Derivatives of castor seed, castor meal and oil have also witnessed a sharp rise in prices. Castor meal jumped by 24% to Rs 7,500 a quintal and castor oil rose 19% to $1,515 a tonne so far this year.