by Abhay V. Udeshi, Chairman, Jayant Agro-Organics Ltd.
Castor Oil Market Update: Insights for the ICOA Newsletter
A very happy new year 2025! The castor oil industry reflects on a year of challenges and opportunities shaped by shifting production trends, evolving global demand, and complex geopolitical factors. This report delves into the key aspects influencing the market and offers insights into the potential outlook for 2025.
Production Trends
Castor-growing regions have faced significant challenges this year, with production acreage reducing by an estimated 10-12%. This decrease is attributed to adverse weather conditions, including unseasonal rains that have affected crop health and yield. Consequently, the overall crop size for 2025 is projected to shrink by approximately 10% compared to the previous year.
The importance of favorable weather conditions cannot be overstated, as the final crop yield will largely determine the supply scenario for 2025. Farmers and stakeholders are hopeful that a return to stable weather patterns during the crucial growing and harvesting periods will mitigate some of the losses.
Global Demand Trends
Demand for castor oil saw a robust 11% year-on-year increase during 2024 compared to 2023. This surge underscores the versatility of castor oil and its derivatives across multiple industries as also due to inventory management. However, the outlook for 2025 suggests that demand may plateau or slightly decline due to a confluence of global factors.
China, one of the largest consumers of castor oil for industrial applications, has shown signs of economic cooling. Slower industrial output and reduced export activity are expected to temper its demand for castor oil and related products.
In the European Union, political uncertainty in key member states has added complexity to trade and industrial policies. As EU nations continue to prioritize energy security, renewable initiatives, and climate policies, the demand for bio-based chemicals may remain stable but could face delays due to shifting governmental priorities.
Meanwhile, geopolitical tensions, including the ongoing Russia-Ukraine conflict and broader global economic instability, are expected to influence market trends indirectly. These factors could impact logistics, trade routes, and the broader chemicals industry, which relies heavily on castor oil derivatives.
Impact of the 2024 U.S. Presidential Election
The results of the U.S. Presidential Election introduce another layer of uncertainty. The new administration’s stance on global trade agreements, environmental policies, and industrial regulations will significantly influence the castor oil industry. Policies aimed at encouraging renewable energy and bio-based solutions could drive demand, while protectionist trade policies or increased tariffs could create headwinds. The coming months will provide greater clarity on the direction of these policies and their impact on the global market.
Pricing and Currency Dynamics
Despite the challenges, the pricing outlook for 2025 remains relatively stable. Prices are expected to range between $1500 and $1650 per metric ton, supported by an average exchange rate of ₹85.50 to $1 USD.
Currency fluctuations, particularly between the Indian Rupee, US Dollar, and Euro, will play a critical role in determining international prices. Additionally, the strength of the
U.S. Dollar against other currencies could impact the purchasing power of importers and exporters, influencing trade dynamics. Stakeholders are advised to closely monitor currency trends and central bank policies globally.
Conclusion and Recommendations
The castor oil market continues to demonstrate resilience in the face of multifaceted challenges. Stakeholders must remain vigilant, keeping a close watch on weather conditions, geopolitical developments in the U.S., EU, and China, and currency movements to adapt to the evolving landscape. Strategic planning and informed decision-making will be crucial in navigating the uncertainties of 2025.
As we start the new year, the International Castor Oil Association takes this opportunity to express gratitude to all its members, partners, and stakeholders for their unwavering support and dedication.
May the coming year bring prosperity, peace, and continued success to all.
Warm Regards,
Abhay V. Udeshi