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Unlockthe potentialof castorseed

Hedge your Price Risk ononly liquid futures platformin the world for castor seed

Physical prices highlycorrelated with Futures Priceson NCDEX

Increased Efficiency inyour hedging operations

Connects the entirevalue chain of castor seed



Castor seed

Castor seed value chain

Current Scenario

EXPORT /PAINTS /

LUBRICANTS

Fertilizer /Export

Castor plant (Ricinus communis) is grown in

arid and semi-arid regions. It is cultivated in 30

different countries on a commercial scale, of

which India, China, Brazil, Russia, Thailand,

Ethiopia and Philippines are major castor seedgrowing countries which account for about 88%

of the world's production. In India it is a kharif

crop, sowing in July-August and arrivals from

December onwards till March. Gujarat is the

chief producing state, having a share of 86%

of domestic production, followed by Andhra

Pradesh and Rajasthan. A bag packed of

castor seed contains 75kg by weight.

Castor is a non-edible oilseed crop; basically a cash

crop, with average 46% oil recovery. Castor seed

production in India is around 9-10 lakh MT. Castor oil

(extracted from castor seed) and its derivatives have

vast and varied applications in the manufacturing of

soaps, lubricants, hydraulic and brake fluids, paints,

dyes, coatings, inks, cold resistant plastics, waxes andpolishes, nylon, pharmaceuticals and perfumes.

CASTORSEED

Meal

Oil

Castor oil is the largest vegetable oil exported out of

India. India is the biggest exporter of castor oil holding

about 70% share of the international trade in this

commodity followed by China & Brazil.



Crop characteristics

Production scenario

Domestic current scenario

Castor is a perennial crop but grown as an annual one for economic

purposes. It is cultivated mostly in the arid and semi arid regions in the

world. It thrives in a wide rage of soils and requires well distributed

rainfall of 500 to 600 mm throughout the crop period. The crop duration

is 4-5 months. In India, it is sown in July / August and harvestingcommences around December / January. The seeds are then dried,

de-podded, bagged and brought to the market yards of trading. The

arrivals in the market start from December onwards.

Production of castor seed has remained more

than 10 lakh metric tonnes per year in last few

years with production ranging between 10 to

16 lakh tonnes. The major states producing

castor seed in India are Gujarat, Andhra

Pradesh, Rajasthan and Karnataka. The

following pie chart shows:

India is the largest producer of castor

seed and castor oil in the world. Indiacontributes about 80% to the world

production (Source: Faostats.org). China

is the major importer. Other major

producers of castor seed in the world are

China, Brazil, Mozambique, Angola and

Thailand. The following pie chart shows

the country wise production share in the

year 2011.

States JulyMay Jun Aug Sept Oct Nov Dec Jan Feb March

Gujarat

India

China

Brazil

Mozambique

Others

Andhra

GrowthSowing Harvesting / Arrivals

Gujrat

Tamil Nadu

Karnataka

Andhra Pradesh

Rajasthan

Others

84%

7%

5%2% 2%

73%

1%

4%15%

5%

2%



Indian exports:

Castor production in Indiafrom 2001 - 2012

India is the major player in the export market of castor derivatives. India exports 70-80% of total production of its castor

oil and almost all of its castor meal. Major export destinations for castor oil are China, European union and USA while

castor Meal is exported mainly to south-east Asian countries. Indian exports are constantly growing every year with

growth in industrial demand of castor derivatives worldwide.

Caster oil exports (MT) Caster meal exports (MT)

2009

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

0

1000020000

30000

40000

50000

60000

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013

9.1

7.8

9.19.8 9.7

11.9

15.7

11.4



Factors affectingcastor seed prices

NCDEX castor seed futures can beused in following ways:

• Production and acreage variations

• Monsoon and level of rainfall

• Yield level in other countries

• Prices of other competitive oils like hydrogenated oil,

dehydrated oil, sulfated and sulfonated oil etc.

• Demand of the importing countries and domestic demand

• Seasonal price variations

• Carry over stocks

• Development of new uses of the oil

PROCESSORS:

Processors normally buy from the spot market whenever there is demand for the processed product or they have to stock

enough material during the peak arrival season. In the first case, they have to buy at the market price and hence are exposed to

the price risk. In second case, they have to incur additional inventory cost as well as risk of prices of stored material going down.

Any processor can overcome both these problems by hedging his requirement of stocks by going long in castor seed futures

contract in those months when he has forward sale contract for derivatives.

EXPORTERS:

India is the major exporting country for castor seed derivatives. NCDEX castor seed futures have good liquidity in all contracts

including far month contracts. Exporters can use NCDEX castor seed futures contract to hedge their future shipment.

TRADERS/ STOCKISTS:

castor seed stockists who stores the material in the arrival season in expectation of price rise in future are actually speculating

by not hedging their stocks. There is always a possibility of market moving against them and they end up incurring huge loses.

Rather than following the traditionals approach of storing goods in anticipation of price rise, these stockists can actually turn

themselves into Cash and carry players. In this approach, they can sell their stocks in future market and keep on rolling over to

the next month whenever the carry is positive. If the carry is negative, they can sell their produce in the physical market and

square off their position in NCDEX castor seed futures contract. In this way, they can gain even when the markets are bearish.



Contract specificationsTicker symbolBasisUnit of tradingDelivery unit

Maximum Order SizeQuotation/base valueTick sizeQuality specification

Quantity variation

Delivery center

Additional delivery centers

Delivery Logic

Due Date/ Expiry Date

Price limits

Premium/Discount

Position limits

CASTORSEEDEx-warehouse Deesa, exclusive of sales tax/VAT10 MT10 MT

500 MT ` Per Quintal (100 kg) ` 1Castor Seed (Gujarat small seed) with the following:specifications:Oil contentFotri (Husk) and damaged SeedsSand, Silica and StonesMoisture contentAcceptable quality variations at the time of taking physical delivery shall be applicableas per annexure to the contract specifications

+/- 2%

Deesa (upto the radius of 60 km from the municipal limits, within the state of Gujarat)

Bhabhar, Kadi, Palanpur, Patan (upto the radius of 60 km from the municipal limits withlocation wise premium/discount as announced by the Exchange from time to time

Compulsory Delivery (Staggered delivery)

Expiry date of the contract:20th day of the delivery month. If 20th happens to be a holiday, a Saturday or a Sundaythen the due date shall be the immediately preceding trading day of the Exchange,which is not a Saturday

Daily price fluctuation limit is (+/-) 3%. If the trade hits the prescribed daily price limitthere will be a cooling off period for 15 minutes. Trade will be allowed during this coolingoff period within the price band. Thereafter, the price band would be raised by (+/-) 1%and trade will be resumed If the price hits the revised price band (4%) again during theday, trade will only be allowed within the revised price band. No trade / order shall bepermitted during the day beyond the revised limit of (+/-) 4%

Quality variations shall be accepted with discount as under:Oil Content:• From 45% to 47% accepted at discount of 1:2 or part thereof,

• Below 45% rejected

Fotri (Husk) and damaged seeds:

• From 2% to 5% accepted at discount of 1:1 or partthereof,• Above 5% rejected

Limits on open positions for aggregate as well as near month will be across all contractsand all Exchanges Member level: 40,000 MT or 15 % of market open interest, whicheveris higherClient level: 8,000 MTThe above limits will not apply to bona fide hedgers. For bona fide hedgers, theExchange will, on a case to case basis, decide the hedge limits.Near month limit (Applicable from 1st day of the month in which the contract is dueto expire)Member level: 10,000 MT or 15% of Market wide near month OI whichever is higher

Client level: 2,000 MT

47% basis2% basis1 % max4.5% max

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Akruti Corporate Park, 1st Floor, Near G. E. Garden, L. B. S. Marg, Kanjurmarg (West), Mumbai - 400 078.

Tel : (+91-22) 66406609-13, Fax : (+91-22) 66406899, E-mail : [email protected], Website : www.ncdex.com

Documents

caster_brochure_web.pdf