ICOA Newsletter – 19 April 2023

By:  Priyam Patel, N.K. Proteins Pvt. Ltd.

Castor Outlooks 2023 vs 2022

The total castor seed cultivation in India for the year 2022-23 is estimated to be 918K hectares, according to government estimates, an increase of about 13% compared to the previous year’s estimate of 811K hectares in 2021-22. However, there have been significant variations in crop estimates over the last few years, with errors in yield calculations being particularly notable. For instance, the advanced prediction for last year’s yield was around 1.9 million but was revised downward to 1.7 million, and the actual yield turned out to be even lower at 1950 kg/hectare compared to the first advanced prediction from the agency of 2228 kg/hectare.

For 2023, the total yield predicted by the Solvent Extraction Association (SEA) is 2129 kg/hectare, but the exact yield won’t be known until the second half of 2023. Castor is mainly grown in Gujarat, Rajasthan, Andhra Pradesh, and Telangana in India, with 85% of castor production coming from Gujarat. Last year, the price touched a high range of 6000 to 7800 per quintal throughout the year, which was favorable to farmers’ interests in cultivating castor seed. However, we see only a marginal increase in the area of castor seed cultivation, from 100K to 110K hectares, in 2022-23. This indicates that Indian farmers are allocating limited land for castor in the future as well. While Indian land may not be increasing, we need to focus on farmers’ interests to maintain prices within a particular range, avoid speculating practices, and particularly focus on yield improvement, which is being addressed by SEA’s yield improvement program

Normally, the castor industry has been growing at 7% in recent years, but last year that growth disappeared, and demand dropped by 12%. One year after the Russia-Ukraine war, the global economy is still enduring the consequences: crunched supplies of grain, fertilizer, and energy, along with more inflation and economic uncertainty, particularly in the European Union, which has suffered from energy crises and high energy costs that directly affect manufacturing growth. Additionally, last year, we saw the side effects of COVID-19 on overall demand, with USA, Japan, and China overstocked during the COVID-19 pandemic in 2020-21, leading to a stockpile that affected new demands in Q3 and Q4 of 2022.

However, with the abnormal phase of unusual uncertainty over, people are back to a normal situation, and this has a direct effect on any kind of production growth, which is returning to normal. Therefore, we expect that any demand that dropped in 2022 will rebound in 2023, and the stock of castor seed in farmers’ hands will remain in the supply channel, such as seed stock traders, processors, exporters, importers, distributors, and end-users, and appear to be very low compared to usual.

In February, the SEA conference presented data, and China’s buyer meet data indicated that demand could possibly increase by at least 10%. We have seen many crop plantings delayed, with some crops hardly harvested once due to delays, and this has been considered in the area, but with the same delay, the plants are not expected to produce the same harvest yield.

Please find castor outlook which is based on higher side predicted Oulook 2023.

    OUTLOOK 2022

   

    OUTLOOK 2023

 

Carry opening stock

135,789.00

 

Carry opening stock

108,129.43

estimated crop size

1,600,000.00

 

estimated crop size

1,800,000.00

total seed available

1,735,789.00

 

total seed available

1,908,129.43

oil form

815,820.83

 

oil form

896,820.83

total consumption

 

 

total consumption

 

export

590,000.00

 

Expected 10% growth export

650,000.00

derivatives

125,000.00

 

derivatives

150,000.00

local

50,000.00

 

local

50,000.00

Oil  form

765,000.00

 

Oil  form

850,000.00

seed form

1,627,659.57

 

seed form

1,808,510.64

open for 2023

108,129.43

 

open for 2024

99,618.79

         

Weather forecast: 

The rainfall in March 2023 averaged over the country is most likely to be normal but which is affected to agro product specially wheat, rice, rapeseed, chickpeas, and also its direct impact on castor crop production and timing. Unseasonal rain and thundershowers have already damaged crops in many districts in Gujarat, Madhya Pradesh, Maharashtra, and Rajasthan. Again, we said the risks to India’s agriculture sector are high, given the current weather phenomenon and its impact on crop production and timing. Lastly, the summer rainfall during the next three months will be below-normal in most areas of Northwest and West-Central India and some parts of East and Northeast India. Overall, the countrywide rainfall figures will be normal (83-117% of Long Period Average). As per experts, if the weather forecast is accurate, El Nino is expected to appear around the second half of the year 2023.

Indian Economy Growth:

The Indian economy has been growing at an impressive rate in recent years and is expected to continue doing so. According to the rating agency, the country’s GDP is projected to grow at 6.5 per cent in 2023-24, with a range of 6 to 6.8 per cent. This growth is being driven by a variety of factors, including a large and growing middle class, rising investment, and increasing urbanization. 

India’s Focus on Green Growth:

The Indian government has declared green growth as one of its priorities, and castor is emerging as a key player in this area. Castor is a green product that is used as fertilizer and as a fuel for energy. The environment protection program’s main aim is to reduce carbon emissions, and castor meal is a green fuel with a high calorific value. Policymakers worldwide are making targets to reduce carbon footprints, and the world is looking to greener products as part of sustainability efforts.

Some Indian crusher using 100% castor meal as fuel for all kinds of castor oil and its derivatives production. They are committed to offering 100% green energy-based castor oil, which is not only environment friendly but also sustainable.

With India’s focus on green growth and the potential impact of weather phenomenon on agriculture, it is imperative that we prioritize sustainable practices and products. Castor is emerging as a key player in India’s green growth story, and we must embrace its potential to reduce carbon emissions and promote sustainable development.

Role of the Castor Industry:

The castor industry is set to play a key role in India’s economic growth, thanks to its many applications in agriculture, industry, and energy. Castor oil is widely used in the manufacture of various products, including soaps, cosmetics, lubricants, and biofuels. The use of castor meal as a green fuel has also been gaining popularity, as it has a high calorific value and can help reduce carbon footprints. The Indian government has identified the castor industry as a key sector for growth. Top leading producers of castor oil and castor meal, they all are well-positioned to take advantage of this growing demand and contribute to India’s economic growth. They all are proud to use 100% castor meal as fuel for all their castor oil and derivatives production and believe that their commitment to green energy will help drive the growth of the castor industry and the Indian economy.