Castor seed prices in Gujarat have risen sharply in the last few weeks because of strong demand for castor oil in the overseas markets and drop in production.
Experts said the current upward trend in prices would continue for some more time because of low supplies.
Traders said, though castor seed production in November last year was estimated to be around 9.50 lakh tonne, it has now been revised downwards to 800,000-850,000 tonne because of poor yield in major producing centres.
?Production of castor seed in south India was estimated to be around 3.50 lakh tonne this season, but looking at the arrivals, now we feel that output might not be more than 2.50 lakh tonne.
Similarly, production in Gujarat is now expected to be around 6.50 lakh tonne, down from the earlier estimate of over 6.5-7 lakh tonne,? Harilal Patel, former president of Rajkot castor market, said, adding that though production is down, but demand for castor oil has been rising, which could further push up seed prices.
In December 2009, near-month castor futures were quoted at Rs 2,970 per quintal, which in March 2010 dropped to Rs 2,870. The June futures is being quoted at around Rs 3,065 per quintal, which shows that market players expect castor seed prices to rise further in the coming months.
In the last fortnight, US has placed orders for exports of 4,000 tonne of castor oil at the rate of $1,430 per tonne, while another order for export of 2,000 tonne of refined castor oil has come from Europe at $1,350 per tonne. China, another big buyer of Indian castor oil has also placed an order for export of 4,000 tonne of oil at $1,350 per tonne.
With export orders of about 10,000 tonne of castor oil in just fifteen days, traders said a surge in castor seed prices should be expected in the coming few days.
Not only that, export order of commercial castor oil is to be fulfilled and sent to China by the end of May 2010, which would further add to bullish sentiments.