With a crop size of just Rs 6,000 crore, castor seed is among the most traded commodities on India’s largest farm futurestrading platform, the National Commodity & Derivatives Exchange (NCDEX).
Castor seed’s monthly turnover on the NCDEX is double the crop size due to high volatility and rising prices. There has been a spurt in trading interest over the last three months and in two of them it has been the most traded commodity on the bourse.
Guar used to be most traded commodity on the NCDEX but after curbs on excessive speculation, the counter lost sheen. Over the last year refined soya oil has been the most traded but in December-January castor seed provided over 20 per cent of the exchange’s volume. In February it fell to 15 per cent.
Data collated by the Forward Markets Commission (FMC), the commodity market regulator, showed castor seed contributed 27 per cent of the NCDEX turnover at Rs 104,549.87 crore in December 2013. “Castor seed is one of the more liquid contracts on the exchange. The increased turnover over the past three months reflects the underlying fundamentals.
The state government and trade bodies have estimated low castor seed production in India for 2013-14, based on which, Junagadh Agriculture University (JAU) has predicted castor prices may rise from March to May.
The Department of Agricultural Economics at JAU analysed the historical monthly price data of castor collected from Agricultural Produce Marketing Committee (APMC) at Patan. Based on the econometric analysis of castor price and in consultation with the National Agricultural Innovation Project, Domestic and Export Market Intelligence Cell, Tamil Nadu Agricultural University, Coimbatore, it has been noticed that the prices of castor may remain in the range between Rs 760 and Rs 860 per 20 kg from March to May this year. “The farmers must take note of this, take their own decision to store castor and sell after May 2014. Keeping the situation in view, if export opportunities continue to remain better, there are chances that prices may go up in future days,” Maganlal Dhandhalya, associate research scientist at Department of Agricultural Economics in JAU, said.
Expecting less production and strong export demand supported by weak Indian rupee, castor price started rising from Rs 700 per 20 kg in first week of November 2013 and touched Rs 900 per 20 kg in third week of December 2013. Currently, it is priced at Rs 800 per 20 kg in various markets of Gujarat.
According to the study, export of castor oil increased over 10 per cent per annum for this year from last two years and is likely around 5.80 lakh tonnes. The domestic consumption is estimated to be about 1.50 lakh tonnes in 2013-14, which indicates that, total expected production of current will be utilized. Indian castor seed production declined from a record high of 2.29 million tonnes in 2011-12 to 1.96 million tonnes in 2012-13 and is further likely to fall about 1.64 million tonnes (as per second advance estimate dated 14-02-2014) in 2013-14, as the area under the crop shrunk from 1.47 million hectares in 2011-12 to 9,84,000 lakh hectares in 2013-14. This has been attributed to low castor prices of Rs 700 per 20 kg from March, 2012 over the last two years.
Castorseed prices dropped by Rs 66 to Rs 4,360 per quintal in futures trade on 28th Feb on profit booking by traders at existing higher levels.
Marketmen said profit-booking by speculators amid a weakening spot market trend mainly influenced the sentiment.
At the National Commodity and Derivatives Exchange, castorseed prices for June contract dipped by Rs 66, or 1.49 per cent, to Rs 4,360 per quintal, with an open interest of 9,310 lots.
Most active March contract fell by Rs 46, or 1.10 per cent, to Rs 4,213 per quintal, having an open interest of 1,33,440 lots.