Decreased Output and Stock Adjustments

Currently, castor oil prices remain stable, although production has decreased by 16-17% across Rajasthan, Gujarat, Andhra Pradesh, Karnataka, and Maharashtra. Most stockists have already reduced their stock levels, making trade potentially profitable at current prices. The castor crop season started in February, with production concentrated in Rajasthan, Andhra Pradesh, Karnataka, and Gujarat, and substantial output in Maharashtra. Continuous high production over the last two years slowed the market last year, preventing a price rise for the entire season.

Castor Oil Prices Set to Increase Further

Due to unfavorable weather, the latest estimates indicate a drop in castor production from 2.1 million tons to 1.75 million metric tons. Simultaneously, consumption has risen by 4.5% over the past two years, contributing to a price increase of $0,036 per kg since the beginning of the season, reaching $0,684-$0,696 per kg. Medicine manufacturers are experiencing a prosperous period, and industrial demand continues to rise. Consequently, future profits appear promising. Castor is primarily consumed as non-edible oil, but its industrial demand has surged, driving a 26-27% increase in trade over the last decade.

Government Efforts and Market Adjustments

The government has boosted productivity by providing hybrid seeds, but rising consumption and adverse weather may lead to a future shortage of castor seeds. Last season's high production created market pressure, with old stock saved over the last two years, bringing total production to 2.1 million metric tons. This year, 0.25 million metric tons of old stock and 1.75 million metric tons of new crop yield a total availability of 2 million metric tons, insufficient for future consumption. Therefore, castor and its oil prices will likely remain strong. Prices for castor, which were $0,654 per kg at the start of the new season, have risen to $0,702 per kg at the plant reach, and oil prices have climbed to $1,416-$1,44 per kg. An additional increase of $0,12 per kg is expected.

In summary, castor oil prices are expected to surge due to decreased production and increased demand. Market dynamics, including stock adjustments and government efforts, will continue to influence prices. Therefore, traders and producers should prepare for potential price increases and market shifts.