Castor seed had shown an impressive upside growth between February 2021 and May 2022. Between these months the prices had increased by nearly 75 percent.
The markets were supported by improving local demand followed by the sharp upside in oilseed prices; in addition to a drop in the carry-forward inventory levels. Due to the lower crop size in 2021, the inventory is running tight currently. For the year 2021-22, India is estimated to produce approximately 1.51 million metric tons of castor seeds. This will be a decline in the production number when compared with the 2020-21 average which stood near 1.65 million tonnes.
The harvest for castor seed is over in India and the monsoon season has started. The first rainfall was a bit earlier than normal in the south of India. As of now, we are getting normal monsoon performance for the year 2022. For the next 3 months, the amount of rainfall and the distribution of the rain within India will have a big impact on the planting decisions of farmers.
The hike in the Minimum Support Prices for Kharif oilseeds and higher price levels will be encouraging the farmers to increase the planted area this year. Castor is normally planted in August.
Prices have reversed from the upward trend from June'22 onwards, and when compared with the May'22 end prices, castor seed is down nearly Rs.300 per quintal currently. The estimated consumption for 2021-2022 is around 19-20 lakh tonnes (LT). For the same period, the expected production plus the carry-over inventory may be just near 20-21 LT, meaning a tight supply situation. This will keep the market supported. As demand is stable, most stockists will prefer to wait till the sowing data starts coming out from the government. Therefore, selling intentions are unlikely to increase for another one or two months.
This will be pushing the prices upwards. As per the medium-term charts, the active month futures contracts can move towards 7700-7800 in forthcoming months, in case the contracts close comfortably above the 7230-7250 support region, for 2-3 consecutive weeks at least.
