MUMBAI (Commoditiescontrol) - Castor seed traded in tight range during the current month so far in the absence of any encouraging advices from export front.
Castor seed was last traded at Rs 3,910/100kg at the benchmark Deesa market of Gujarat. It was traded within range of 3872-3927 during this month. Export inquiries in the recent times are said to be slow as the big buyer Chinese markets were closed for Lunar New Year holiday between Jan 28 to Feb 2, 2017.
Inquiry in castor oil during the recent weeks were mostly sluggish and hence exports are likely to remain on the lower side in January month as well, against 46,250 metric tonnes in January 2016.
But since domestic castor seed production for 2016-17 was projected lower at 11.3 metric tonnes versus 14 lakh tonnes in 2015-16, sharp downside likely to be prevented, unless export demand drops significantly.
Domestic crushers at present buying castor seed in restricted manner due to sharp slump in castor oil and cator meal exports in the recent months. Prices of derivatives are lower in the international market has resulted negative margins for crushers.
Castor oil avaiability for 2016-17 season is projected lower at 5.09 lakh tonnes against 6.30 lakh tonnes last year. Lower castor oil availability with expectation of steady export demand likely to support castor seed in the long term.
Castor oil exports as on December of current financial year 2016-17 (April-March) stood at 378,146 tonnes, down from 393,662 metric tonnes last year, according to The Solvent Extractors' Association of India (SEA).
Castor meal exports during April-January (2016-17) dropped over 12 percent at 328,181 metric tonnes compared with 373,871 metric tonnes corresponding period a year ago, as per SEA data. Korea (304,932) and Taiwan (17,535) were the main buyers of castor seed during the said period.
Castor seed activity in the spot market was badly hurt earlier after government annouched to scrap Rs 500 and Rs 1000 note followed by restriction on withdrawal limit from banks and ATM's leading to liquidity crunch with buyers, but situation and business activity is getting back to normalcy in major trading centers after recent RBI removes withdrawal limit on current accounts.
Castor seed supply in the spot market as on date of current calender year, started from January stood at 57434.1 metric tonnes, marginal down from 59058.58 metric tonnes a year ago, according to Agmarknet data.
Castor oil ex-tank, Rotterdam was last priced at $1,475 per tonne, while castor oil at Indian port said to be around $1,170 per tonne.
NCDEX Castor seed March Futures
Castor seed March futures dropped 2.47 percent at Rs 3,936/100kg this month on the National Commodity & Derivatives Exchange Ltd. Other hand volume and open interest rose 124 percent and 80 percent respectively. Higher volume and open interest with weakness in price indicating short position build up in the contract.
Further fall in March delivery castor seed can't be ruled out. Resistance is at Rs 3,950 level, while support is place at Rs 3,850.
Conclusion
Demand from crushers are likely to remain subdued in the near term due to disparity. Castor seed and castor oil may witness some pressure unless demand improve sooner. Further new crop supply pressure is also wiegh on prices. But sharp downside likely to capped by lower production of castor seed in the country this year.
(By Commoditiescontrol Bureau; +91-22-40015533)
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