Castor seed to ease on likely rise in acreage

Castor seed prices at major spot markets of Gujarat, the largest producing region, are seen easing over the next six sessions on expectations of an increase in cultivation area and on weak demand, traders said.

On the National Commodity and Derivatives Exchange (NCDEX), castor seed futures are seen mimicking the trend in spot markets, analysts said.

"Due to good prices in the last season, farmers in Gujarat are shifting from other crops to castor seed. Hence, acreage under sowing is expected to rise 10-12 per cent," said Rajan Shah, an Ahmedabad-based analyst.

Traders are expecting a 25 per cent rise in output this year.

"Also, low demand from millers due to weak off-take of castor oil is weighing on prices," said Manubhai Joshi, a Deesa-based trader. Export demand for castor oil is also poor.

"Export deals have been toned down to 500-1,000 tonnes at present, as importers have realised that huge consignments would hike prices in spot markets making their imports expensive," said Joshi.

Arrivals in Gujarat were 10,000-15,000 bags (1 bag = 75 kg) today.

"However, once the rains recede, arrivals will gather strength," said Ramanbhai Kanjibhai, a Palanpur-based trader.

Castor seed was steady in the spot markets at Rs 393-394 per 20 kg today.

Traders expect spot prices to ease by Rs 10 per 20 kg over the coming week.

Futures are likely to be weak in the coming days on good output expectations, analysts said.

"September castor seed contract on NCDEX is likely to see strong support at Rs 395 per 20 kg and resistance at Rs 420," said Shah.

Breaching of the support level will lead to a sharp fall in prices, he said.

September contract on NCDEX was at Rs 406.80 per 20 kg, down Rs 5.60 from Wednesday.