Castor seed prices rally on supply crunch

The current rally in castor seed rates is mainly on supply crunch in the markets, traders and analysts said on Friday. The prices are seen volatile till December-end, after which arrival of new crop will meet the demand from crushers, they added.

"The prices had touched a low of around Rs 270 per 20 kilogram in the spot markets around late October as stockists liquidated their inventories in expectation of early arrival of the new crop. However, harvesting delay has turned the supply channels dry because of which rates are firming up," Prakash, an Ahmedabad-based castor seed trader, said.

Market sources expect the firming up in prices to continue till December after which arrival pressure from new crop will pull them down.

"The new crop will start arriving in Ahmedabad and Rajkot from January 15 and before that, rates might test Rs 310-320 per 20 kg in spot," another Rajkot-based castor trader said.

Today, castor seed spot price in Disa market in Gujarat was around Rs 296 per 20 kg. Experts believe that castor seed rates had bottomed out to around Rs 280 per 20 kg in the NCDEX December futures towards the end of October and the current rally is on bargain hunting.

"We expect castor seed contracts on the NCDEX for December and January to move in the range of Rs 295-300 per 20 kg as this buying trend will continue," Prerna Desai, an analyst with Refco Commodities, said.

The december contract for castor seeds on NCDEX was at Rs 290.70, up from Rs 287 at the previous close.

Traders and market sources said castor seed prices both in the open market and futures would stabilise around end-December and January after the new crop starts arriving.

"The initial estimates indicate that castor production has been good this season despite delay in sowing which might bring down the rates to around Rs 250 per 20 kg," the Rajkot-based trader said.

Initial crop estimates by Central Organisation of Oil Industry and Trade said India's 2005-06 (November-October) castor seed production is likely to be around 870,000 tonne, up 9 per cent on year.

Production in Gujarat, India's largest castor producing state is likely to be unchanged around Rs 280,000, but higher output is expected from Rajasthan and Andhra Pradesh, COOIT said.