Castor prices tumbled by over 12 per cent as the arrivals of the commodity has doubled in past ten days amid bleak demand.
Traders expect prices to fall further due to rising supplies and poor demand. The arrivals has increased from 60,000 bags ten days ago to 1.30 lakh bags currently. The prices have fallen from Rs 1,025-1,050 to Rs 920-930 per 20 kg recently.
Biren Vakil, an Ahmedabad-based commodity analyst said, “The farmers have started selling their products in the market as they believe that price would not increase any further.”
About one and a half months back castor traded as high as Rs 1,300-1,320 per 20 kg mainly due to short supply.
At the time of high prices, farmers held the castor crop in anticipation of a further rise in the prices. But the prices started coming down from its peak levels due to a fall in demand. The weakness in prices is pushing farmers to clear their castor stocks.
Market participants informed that the arrivals may continue to remain high for about a month in the range of 1.30 lakh to 1.40 lakh bags. It is only in may that the arrivals may start decreasing.
“As long as the Chinese demand does not come up, the castor market would continue to run down side. For about a month there is no hope for upside. After that, market depends on the demand," Vakil informed.
Rajkot-based trader Haribhai Patel maintained, “The demand in spot market is very low. There are no exporters in the market to buy the commodity and on the other hand the supply is high. This is causing prices to fall. For now, there is no reason for price rise in castor.”
Rajubhai Pobaru, president, Rajkot Commodity Exchange (RCX) said, “The export demand is expected to start after mid-May, till then prices will continue to fall.”
As per a survey conducted by the Solvent Extractors’ Association (SEA), total area under castor crop in India for the year 2010-11 has increased by 14 per cent to 8.59 lakh hectares.
The total production of castor seeds for the year 2010-11 is estimated at 11.90 lakh tonnes, which is up by 22 per cent as compared to 9.78 lakh tonnes in previous year. Gujarat's castor production is expected to rise by 17 per cent to 8.60 lakh tonnes against 7.36 lakh tonnes recorded last year.
