What started as “China Corona Factor” until February 2020 soon became a global pandemic with COVID Waves No.1, then No.2 and in some places already No.3. Every Wave has its own challenges making life difficult at every stage. “LIFE” to “Livelihood”, “Strengthening the Health Care Systems” and “Getting back on Track” with “Innovations” linked with “Digitization in Every Field” with Vaccine Inventions by various Companies and Institutes, its production, FDA and government approvals across the globe with speed together with vaccination program in different countries have kept the world going at different operational levels.
News From India
India was at the forefront in the world to have the strictest lockdown last year at the beginning of COVID situation in end-March 2020. The economy was reviving at a good pace with near to normal operations to a situation where complacency prevailed at various levels and not much attention was given to the second wave forthcoming as in different parts of the world. The second wave has been very severe with a different mutant variant which attacks young adults and children unlike the first wave variant. Lockdown for the country was ruled out as with more knowledge on COVID behaviour (masking, safe distancing, hand washing and sanitization) and with availability of vaccine became an important tool and comfort to tackle the virus attack. The second wave in India has been devastating with the number of cases rising and rising too fast which has woefully strained our medical infrastructure – with no hospital beds available, no oxygen available resulting in more deaths then one would have expected – leading to a chaos even at the crematoriums. “Uncertainty” continues to loom over the country with such a massive scale of infection – this time in more areas compared to last year. Government of India together with State Governments are doing their best in containing the spread and thus have announced curfews (almost a 90-95% lockdown) in major highly concentrated infected areas as also shutting down Hotels, restaurants, gyms, clubs, etc., to avoid any public gatherings or even limiting to even 4 people together. Many trade bodies toohave announced closure of their operations like the market yards since the last 15 days and which is likely to be extended to get the grip over and contain the current situation. Inter- district, intra- state travels are all restricted with travels only permissible with negative RT-PCRreports and only when it is absolutely necessary. The movement of goods including export/import cargoes are currently not affected and are moving under certain restrictions of tests and compliance of COVID behavioral practices. There is a lot of assistance being receivedfrom all across the globe by providing oxygen cylinders, bullets, concentrators, ventilators, etc., together with medicines, injections and vaccines to India to tide over this unprecedented situation. We hope we will tide over this severe situation soon. Mumbai, the commercial capital of the country, continues to be in a practically restricted lockdown situation with most private offices closed and government offices running with 10- 15% attendance.
The India Meteorological Department (IMD) has said the 2021 southwest monsoon starting in June is expected to be normal at 98 per cent of the Long Period Average (LPA). A good monsoon will mean another year of bumper farm production and cascading positive impact for the economy battling Covid-19 infections.
Castor Oil Market Update
Castor Seeds – most of the market yards have been shut except for a few instances where they remain open for a day or so to accommodate farmers produce during the last 2-3 weeks due to apprehensions by the management of the market yards in tackling the COVID related issues. Arrivals of castor seeds bags in the market yards is very limited where the market yards are functioning.
Castor Oil prices have gone up recently on account of the following reasons:
- All vegetable (edible) oil prices are ruling very firm as the availability is limited globally. Soya oil prices in Brazil, Argentina and US are ruling firm and main reason is the weather conditions. Sunflower oil prices in Ukraine, USSR too are very firm. Palm Oil thus follows these major edible oil pricing and also has been ruling firm.
- India is buying about 70% of its edible oil requirements. Import duty in India has been increased sometimes in the last one and half years to encourage Indian farmers to grow more oilseeds so that India could become self-sufficient in edible oils.
- Till 2019, castor oil was one of the most expensive vegetable oils, however, with the import duties going up, castor oil is one of the cheapest vegetable oils available in the country. Thus, with castor oil remaining cheaper than other vegetable oils, the domestic consumption of castor oil has been growing rapidly in many other industries.
- Supply side – the first crop numbers announced during end-February was 1.92 million tons however, there has been a downward revision in mid-April to 1.78 million tons. In our opinion, this crop number is still on the higher side as there has been adverse impact on the yields. With a carry-over of about 0.45 million tons, the total crop supply availability is enough (over 2.0 million tons), however with lower prices since last 1 year, farmers are expecting prices to rise and thus bringing in material at a slower pace which is keeping additional upward price movement.
- Because of COVID situation aggravating, most market yards are shut and thus availability is not easy for the castor seeds. The prices have gone up in the last three weeks or so.
- Demand so far has remained good from all the consumers however, with the COVID developments, it has put an additional pressure of some immediate demand as consumers are concerned with the supply situation in case of new government regulations coming up (just like Lockdown, etc) thus resulting in prices to move upwards. Exports of Castor oil during Jan – April 2021 stands at 208,000 tons (which is historically highest) v/s 157,000 tons during Jan – April 2020.
- In short, prices have gone up because of all the above reasons and expected to stay firm till COVID situation is better known. A lot will also depend on the monsoon developments going forward. Pricing will be the deciding factor on the next growing of the castor crop acreage. in our opinion, we encourage our valued buyers to stay covered for the next 2-3 months as a minimum with all the uncertainties we all are experiencing at this point in time.
India’s Castor oil Industry continues to remain more or less normal in its operations with some exceptions on the shipping, logistics and delays due to trade disruptions across the globe.
Challenges are always there to stay. We all figured out in last one year that future is very unpredictable and we have to be adaptable to the changes around us. Let us all hope for the best.
Stay Safe and Stay Healthy.
Abhay V. Udeshi