Castor seed surges 14% on lower output cues

Major producing centres shifting to cotton and other crops.

Spot prices of castor seed shot up 14 per cent in October "� to Rs 375 per 20 kg from Rs 330 per 20 kg in the beginning of the month. The spot prices saw the surge owing to a lower production estimation on the back of major castor seed-producing centres, including Gujarat, going in for a shift to cotton.

The futures prices for the November delivery, too, rose by Rs 25 in the month under review, from Rs 352.40 in the beginning to Rs 377.20 at the end of the month.

The changeover from castor seed to other crops has also resulted in a loss in the castor seed acreage, and industry players are divided on the actual quantum of this loss.

According to Pravin Thakkar, president, Ahmedabad Commodity Exchange, a large number of farmers in Gujarat have switched over to other crops including cotton owing to late and unfavourable monsoon. The sector, therefore, is estimated to lose about 40 per cent area under castor seed cultivation, he felt.

B V Mehta, executive director of the Solvent Extractors' Association, however, did not agree with the projection and said the loss in acreage could be 10 per cent.

"Though the sector has lost acreage to cotton and other crops, the real picture is not as gloomy as it is often painted by a section of people," he said. Delayed and unfavourable monsoon forced farmers to go in for sowing cotton and other crops rather than castor.

Gujarat, the leading domestic producer of castor seed with an estimated contribution of 60 per cent, is projected to see an output of 4-4.5 lakh tonne against the normal 6 lakh tonne.

Other states such as Rajasthan, Andhra Pradesh, Tamil Nadu and Punjab, and part of Uttar Pradesh are also expected to have lower production this year.

Thus, the country's total production is likely to be in the 6.5-7 lakh tonne range compared with the normal 10 lakh tonne.

According to government sources, castor seed was sown in a total area of 8.9 lakh hectares till October 20 vis-a-vis 9.88 lakh hectares last year. This meant an acreage loss of 9.3 per cent.

"The output is expected to remain subdued "� by 10 per cent "� in line with sowing area, but that will be compensated by a carryover stock of 2 lakh tonne. So, there will be no impact of the fall in output on the availability of castor seed and, hence, prices," Mehta said.

The season is late this year and, therefore, harvesting will be done by February-end instead of early February, the normal harvesting time.

At $875 a tonne, global buyers are currently sourcing castor seed at lower than the usual $900-950 a tonne level.

If prices are quoted higher than the normal levels for international buyers, it will percolate to domestic buyers as well.

India, the world's leading producer, exports its castor seed produce to Europe, US, China, and Japan to the tune of 70,000-75,000 tonne.