Amid anticipation of bumper castor crop in 2012, traders fear a sustained bearish sentiment in castor seed prices for next three-four months. Experts maintained that castor prices may stay lower mainly on account of low industrial demand from domestic as well as international buyers joined with high carryover stock.
The bearish sentiment has already gripped castor prices, which is currently quoting at Rs 4,240 per quintal for NCDEX November contract, down from Rs 5,500 per quintal seen in February this year.
"Castor acreage in Gujarat has jumped to the tune of about 30 per cent, while this year we expect yield to remain good over last year. This has improved crop prospects. State will have castor production in the range of 1.4 to 1.6 million tonnes in 2012, which is also higher by 30 per cent over last year," said Biren Vakil, a commodity expert in Ahmedabad.
According to estimates of state agriculture department, area under castor jumped from 518,000 hectares in kharif season in 2010-11 to about 811,000 hectares this kharif season. Nationally, castor sowing has increased by around 390,000 hectares to about 1.27 million hectares this year from 882,000 hectares reported last year.
The increase in castor acreage came as a fallout of steep rise in the prices of the oilseed last year. "Last year, farmers made good money in castor seed due to high volatility in prices. However, recently there are signs of a slowdown in castor prices and we may see a bear-run for at least three months from now," said a trader in Palanpur, one of the major castor markets in Gujarat.
Experts anticipate the bearish sentiment to persist longer for castor. "We will have extremely big castor crop this year, but looking at the dismal global economic scenario, demand will remain low. Castor demand is likely to be about 1.3 million tonnes next year. Thus, we will have about 300,000 tonnes as surplus, which would put pressure on the prices," maintained Vakil.
Crushing activity may pick up pace once the global economic situation shows some signs of stability. However, till then consumption demand would continue to be a major concern for the suppliers.
Currently, arrivals remained scantly as only the carryover stock is being brought to the markets. The arrivals ranged between 7,000 bags to 9,000 bags currently. "New arrivals are likely to start from January onwards. Till then we will continue to see carryover stock being brought to the market. But this year, castor seed prices would remain low as country's production is likely to be robust over last year," said a Nilesh Shah, a castor trader in Ahmedabad.
Industry estimates India's castor production at around 1.7 to 1.8 million tonnes, of which nearly 80-85 per cent production will come from Gujarat and Rajasthan. Several pockets in Andhra Pradesh, Karnataka and Maharashtra are also likely to contribute to India's total castor supplies.
