India Castor Seed Surges On Exports, Low Arrivals.

Castor seed prices surged in India on robust export demand from China and active buying by local mills amid thin arrivals after cold weather hit the crop, traders and industry officials said.

India is the world's biggest producer of castor seed and the biggest exporter of castor oil. In the western state of Gujarat, the biggest producer in the country, spot prices of castor seed have risen by around 30 percent or 1,200 rupees per 100 kg in one month to 5,200 rupees per 100 kg.

Arrivals at Disa, a key market in Gujarat, were lower by around 10-12 percent in January this year as compared to same period of last year, an official at the marketing yard said.

"Domestic millers are buying whatever comes to the market. Their demand is higher compared to supply from the growers. We could see some more upside from here," said Bharat Thakkar, owner of Parker Oil Mill, based in Disa.

"Arrivals in major markets have fallen due to cold weather conditions during the harvesting period resulting in lower yield, though acreage was higher," he said.

Weather was very cold in Gujarat in December-January.

Castor seed is crushed to produce oil and is mainly exported for industrial use.

"Expecting higher arrivals during January, exporters have signed contracts for January and February shipments. But now they are struggling in procuring castor seeds due to lower arrivals," Shashi Nair, business manager at Gokul Oil Mill, said.

"We expect price to start cooling down from next week onwards as demand for export dries up," Nair said.

Castor oil export during April-December 2010 rose by close to 22 percent to 292,954 tonnes, data from the Solvent Extractors Association showed.

"China is the biggest importer of castor oil this year and their demand has outpaced our incremental production, which is resulting in current price rise," B.V. Mehta, executive director, Solvent Extractors Association, told Reuters.

Source : reuters.com