ICOA Newsletter – 9 February 2023

by Abhay V. Udeshi, Chairman, Jayant Agro-Organics Ltd.

Dear Friends,

Wishing everyone a Happy and a Prosperous New Year 2023.

While the geo-political situation and global economic situation still remaining uncertain, the Indian Budget presented by the finance minister on February 1, 2023 has been a soothing touch. Indian economy takes the lead giving the positive thrust in these uncertain times. The budget virtually touches on all aspects of our economy, doing enough to maintain the growth momentum which makes it most likely to emerge as the fastest growing economy in the world for the 3rd year in a row. The emphasis on good governance, thrust on ease of doing business in India and reducing compliances should all be positive for the long-term growth. Various schemes with substantial capital outlays have been announced to boost infrastructure, energy security, Agri businesses, especially start-ups and giving a boost to national farming – green growth with thrust on afforestation and giving special attention for optimal use of wetlands and biodiversity. Focus on key areas like infrastructure, manufacturing, health, financial sector and digitization across all sectors are all steps in the right direction. Growth oriented policies with special thrust on skill development centers are aimed at harnessing the youth power and reap the demographic dividend. More finer details are awaited. In summary a good budget for everyone with a Strong Stable Macro Economic Environment.

Castor Oil Market Update:

With castor sowing acreage of 918,000 Hectares during 2022 sowing season which is about 15% over the 2021, the crop estimates too are expected to increase to about 1.9 – 2 million tons.   A carry of about 100,000 tons of castor seeds – gives us a total supply of about 2 – 2.1 million tons – during 2023 – almost the same as was in 2022. With the subdued disappearance/demand of castor oil estimated at 760,000 tons during 2022 resulted in a good supply-demand balance. With current economic and geo-political situation remaining uncertain, we would expect similar or a slightly higher demand during 2023 as the pipeline inventory remains dry. With declines in crude oil prices and most veg oils – we can expect some softness in the castor oil prices.  Some news though is emerging on the export policies of Indonesian palm oil like last year and lower crop yields of soya from Argentina have to be carefully watched which could once again bring some price escalations in the coming days and months. Further, as we experienced rains and thunder showers in the last week of January 2023 in major castor growing belt, which is unusual, the vagaries of weather could have a final say and much will depend upon the actual crop yields which could impact the crop numbers. The commencement of hot temperatures during February is another factor to be on the radar for the crop yields as it is too early to assess its impact. Castor seeds arrivals during January remained low – about 40-45,000 bags which should continue even in February due to rains in January. One can expect higher arrivals only during the months of March and April.

Good news is that for bulk loading and unloading of vegoils – new Jetty #7 has been inaugurated on January 23rd, 2023 having 4 lines where edible oils can be discharged quickly and with this infrastructure in place, it will assist exports of castor oil at oil Jetty#2 and #3 tremendously with minimal waiting time – thus removing the pain on account of heavy demurrages paid by the Charterers.

We have the Indian SEA Global Castor Conference in the last week of February. More data and analysis on crop size, demand-supply and price evolution will be deliberated amongst various stake holders. Hope by then, we have more visibility together with stability and peace around the world.

Stay Safe and Stay Healthy.


Abhay V. Udeshi