Castor seed firm on export demand

Castor seed prices in cash markets are expected to trade firm over the next one week amid high export demand and low arrivals, traders and analysts said today.

Futures are expected to show a bullish trend on fresh buying support.

Exporters will continue to buy castor oil in the spot markets to fulfil their export obligations of 22,000 tn for the current month.

"Nearly half of the export demand is from China," said a Gujarat-based trader. Exporters will also have to keep their commitment to the buyers from Europe, Japan and South Korea, he added.

In Europe, castor oil prices are ruling at $1,100 (43,230 rupees) per tonne. Indian exporters are quoting $1,130 per tn for delivery at Rotterdam port.

"Exporters demand for castor derivatives will be higher," said an analyst with Ahmedabad-based brokerage. High export demand for oilcakes will support spot prices, said another trader. Castor oilcakes have huge demand in European Union, the US, Japan and China for use as organic manure.

Castor oilcakes are ruling at around $103 (Rs 4,048) per tonne in global markets compared with $60 per tn six months ago. Low arrivals during Diwali holidays are expected to keep prices firm. Spot markets in Gujarat, the main producing state, will remain closed till the middle of next week.

However, Hyderabad spot markets will open Monday, where around 13,000 bags (1 bag = 70 kg each) are expected to arrive daily on an average during the week. Arrivals are expected to be around 18,000 bags on Thursday, when most of the markets open in Gujarat.

Today, spot markets in Gujarat remained closed. In last one-two trading sessions, castor seed spot quoted Rs 402-407 rupees per 20 kg. Traders expect spot to trade about 2 rupees higher in the coming week.

Castor seed futures are expected to show a bullish trend next week, said an analyst with a Mumbai-based brokerage. Futures will trade in line with Malaysian palm derivatives, which are expected to rule firm on higher crude and soyoil prices.

The December contract on the National Commodity and Derivatives Exchange is likely to get good support at 411 rupees per 20 kg, while the medium-term resistance is pegged at Rs 417 rupees. "If the first resistance level is broken at 417 rupees, the contract could even touch Rs 422," the analyst said.

At 3:30 pm, the November contract was at Rs 418.60 rupees per 20 kg, up 90 paise from Wednesday, while December quoted Rs 416.90, also up 90 paise.