NCoMM Crop Survey Report - NCML · CASTOR CROP SURVEY 2017-2018 NCoMM Crop Survey Report zzyy 24th October 2017 ` CASTOR CROP SURVEY 2017-2018 BACKDROP Castor is a non-edible oilseed

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CASTOR CROP SURVEY 2017-2018

NCoMM Crop Survey Report

zzyy

24th October 2017

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BACKDROP

Castor is a non-edible oilseed crop (a cash crop) with an average of 46% oil recovery. Castor seed is the

source of castor oil, which has a wide variety of uses in chemical based industries. India, China, Brazil,

Russia, Thailand, Ethiopia and Philippines are major castor seed growing countries which account for about

88% of the world's production.

India is the largest producer of castor seed in

the world. India also dominates international

trade in castor oil, meeting about 80% of the

total global demand of this commodity.

China, US, EU, Japan are the major importers

of Indian castor oil.

Castor seed is a kharif crop sown in July/Aug

and harvested from late November onwards

till March (see crop calendar and seasonality

graphs below). The crop duration is 5-6

months. The seeds are dried, after harvesting

de-podded, bagged and brought to the

market yards of trading.

Gujarat is the chief producing state, with a

share of about 81% in domestic production,

followed by Rajasthan (15%) & AP (2%).

Crop Calendar: Castor seed, India

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sowing Growth period Harvesting

a

Gujarat81%

Rajasthan15%

Andhra Pradesh

2%

Others2%

Castor Production in India

SUMMARY • This castor report 2017-18 is primarily based on the field survey undertaken in Gujarat, the state that accounts for about

81% of castor production in India.

• As per the survey findings, the castor acreage in Gujarat this year is higher by 13%. However, the floods in August and

excess rains in Gujarat caused widespread crop damage and will impact the yield of castor crop.

• As a result, the 2017-18 castor production outlook in Gujarat is mildly positive with an expected increase of just 8% over

last year. India’s castor production 2017-18 is pegged at 11.28 lakh tonnes against 10.55 lakh tonnes in 2016-17.

• The short-term price outlook is bearish due to arrival pressure. However, in medium term, the broader fundamentals

will take over and lower stock-to-use ratio will lift up the prices.

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In the recent years, production of India’s castor seed hovered near 17-19 lakh tonnes (as per government

numbers). However, the production of castor showed a steep decline in 2016-17 due to lower area sown. The

production in 2016-17 stood at an estimate of 14.21 lakh tonnes (10.55 lakh tonnes as per SEA of India). Since

2001, the castor seed production in India has grown at a CAGR of 5%, the area has grown at a CAGR of 2.48%

and the yield has grown at a CAGR of 4.20% per annum.

The arrivals begin in late November to early December and peak in March. Mirroring the arrivals, the prices fall early in the beginning of the calender year and then begin to firm up from May-June as arrivals taper off. The seasonality chart below captures the trend for the last five years (2012-2017).

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400

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1200

1600

2000

0

500

1000

1500

2000

2500

200

1-0

2

200

2-0

3

200

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200

4-0

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200

5-0

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6-0

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200

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8

200

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9

200

9-1

0

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

Castor Area, Production and Yield - India

Production '000 tonnes Area '000 hectares

Yield Kg./Hectare Linear (Production '000 tonnes )

0

0.5

1

1.5

2

2.5

0.9

0.92

0.94

0.96

0.98

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1.02

1.04

1.06

January

February

March

April

May

June

July

August

September

October

November

December

Arrivals and Price sasonality of Castor in India

Prices Arrivals

Source: CMIE

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AREA & RESPONDENTS OF THE SURVEY

The survey was undertaken in the top castor

producing state of Gujarat. Gujarat accounts for

about 81% of India’s castor production and 70% of

India’s area under castor.

A total of 500 small & large-scale farmers were

surveyed in the major castor growing districts of

Banaskantha, Kutch, Patan, Mehsana, Surend-

ranagar and Ahmedabad, to assess their castor

acreages and expected yields vis-à-vis last year, as

well as that of their village/tehsil. The farmers were

also surveyed for the crops they shifted to/shifted

from and the factors that affected their acreage

decisions. Apart from farmers in these districts,

traders in mandis were also interviewed for the

survey. The mandis visited included those of

Palanpur, Patan, Deesa, Mehsana, Kadi, Deodar & Bhabar. 2-4 castor traders from each of these mandis

were interviewed to understand their assessment of castor stocks, this year’s castor acreage & production.

A total of 12 seed distributors too were surveyed in the districts to enquire about the castor seed sales this

year to the villages they cater to.

SURVEY RESULTS

1. Banaskantha

Banaskantha is the largest castor growing district of Gujarat accounting for 18% of its castor

area. The major producing talukas of Palanpur, Dhanera, Deesa, Bhabhar, Deodhar, Vav and

Tharad were surveyed. Tehsil/taluka-wise findings from the survey are given below:

a. Palanpur: 75% of the farmers surveyed

reported higher castor area sown. The major

reasons for increased acreage included a

loss in the guar crop due to heavy rains, and

shift from potatoes due to lower price

realisation from them last year. Taking in the

view of traders along with farmers, the

castor area in the Palanpur tehsil is 15%

higher this year over last year. Palanpur district did not report signs of yield loss or crop

damage till the time of the survey. Consequently, production outlook is positive for this

taluka and the output is expected to be higher by at least 12%.

Banaskantha

18%

Kutch

15%

Patan

15%Mahesana

12%

Surendranagar

8%

Ahmedabad

8%

Others

24%

Castor Area of Gujarat

Area covered in survey

15% higher acreage in Palanpur

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b. Dhanera: Due to cyclical crop rotation, expectation of good monsoon and good price

realisation obtained last year, castor was sown in 10% higher area in Dhanera. Jadiya, Bhutib

and Malotra villages of dhanera district reported higher acreage. However, Dhanera was

one of the worst affected talukas by the floods in mid-August which left the lands water-

logged. The re-sown and late sown crop is expected to fetch lower yields. The yields were

reportedly expected to be lower by 5%. As a result, the production may not increase and is

expected to be equal to or slightly below last year.

c. Deesa: 66% of the surveyed farmers in Deesa reported their

castor acreage lesser or equal to last year. As per farmers’

and trader’s view, the castor acreage in the tehsil is 10%

lower this year. The farmers wanted to opt for sowing both

the kharif and rabi (siyalu) crops because of good rains, and

thus they moved away from long duration kharif castor

crop. Also, the area suffered flood crop damage and sand

accumulation which affected castor sowing. The yield for

the late sown crop may be lower driving down overall

production in Deesa by 5%-7% from last year.

d. Bhabar and Deodhar: The acreage is reported 15% lower than last year in Bhabar as the

famers could not re-sow castor after rains which caused damage to the crop and left the

fields in Bhabar water logged. The farmers planned to opt for rabi crop (mustard). The area

in Deodhar on the other hand was reported the same as last year. Overall, the production

for these talukas is expected to be lower by 12%-15%

e. Tharad and Vav: An increase in acreage to the tune of 9% was

reported in the Tharad. Last year, castor was not sown in

some regions of the district due to crop rotation, which

meant that castor was sown this year. Farmers of Bhordu

and Pavdusum villages of Tharad reported increased

acreage due to expectation of good rains. However, the

excess rains caused damage in Tharad region and are

expected to drive down yields. Due to this the production

may not show a positive change in tandem with the area. On

the Tharad-Vav belt, the fields suffered damage due to the

overflow of canal. Farmers in Vav suffered huge losses not

only in castor but also other crops due to canal overflow.

Tharad may record production equal to last year while Vav may record a fall of 7-10%.

Crop damage in Tharad

due to heavy rains

Re-sown crop in Deesa after rains

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The overall Castor acreage in Banaskantha district is estimated to be higher by 10% compared to

last year mainly due to good rainfall in all the four Tehsils. Although acreage reported an increase,

the rainfall and floods severely hit the talukas of Bansakantha, damaging crops and significantly

hitting the yields. Overall, the production in Banaskantha is expected to fall against last year as

the rise in area sown under castor may be more than set off by the damage caused by excess rains

in the monsoons.

2. Kutch

Kutch is the second highest castor producing district in Gujarat contributing almost 15% of the

area. The main castor producing sub-districts of Bhuj, Gandhidham, Anjar and Bhachau were

surveyed. The sub-district wise findings are as follows.

a. Bhuj: Due to better rain this year compared to the previous year, significant number of

kapas, groundnut and sesame farmers opted for castor this year resulting in a noticeable

jump in the total castor acreage of the Taluka. Over

90% of the castor farmers surveyed have increased

their individual acreage. Barring a few pre-rains

sown areas, crops of most of the farmers remained

unaffected and were in good condition. Many

farmers have sown the castor crop for the first time

on better soil moisture and sufficient rains this year.

Overall production outlook remains to be that of an

increment of 12-14% over last year in Bhuj district.

b. Anjar: Crops in some parts of Anjar tehsil have reportedly

suffered losses in the initial days. However, realizing the

favourability of weather for castor production most of the

farmers, whose crop was damaged, opted for re-sowing of

the crop. But Anjar was one of the severely affected region by

the pests which might directly affect the yield of the crop if

the required precautionary measures are not taken timely. So,

a 7-8% increase in acreage coupled with crop losses due to rain

and moderate losses of yield due to pests will collectively

result in just a 2-3% rise in the production of the region as

compared to last year.

c. Bhachau: The initial area in bhachau district witnessed a rise of around 7-8% as the farmers

shifted to castor from Jeera and Groundnut. However, some parts of Bhachau district have

reported loss of crop due to rains. The loss was estimated to be around 20-25% in one third

of the castor growing belt in Bhachau. Other than a quarter of the area, where the losses

High area and yield in the Bhuj district

Severe pest attack in Anjar

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were reported, mostly the acreage was good and the crop condition was better than the

previous year. The farmers are expecting the yield to be around 10% higher than the last

year. Considering the crop loss in some regions and better productivity in the rest, the

overall production can take a hit of around 6% from last year.

d. Gandhidham: There was a significant rise in the acreage of

Gandhidham tehsil of Kutch. No major loss was reported on

account of heavy rainfall that the region experienced. However,

the biggest concern for the farmers of Gandhidham region was

the severe pest attack that struck after the rains. Though the

remedial actions are being taken there but the farmers remain

wary about the yield of the crop. The overall condition of

production in this region looks to be moderately on the higher

side, i.e. 4% higher than last year, with a noticeable increase in

acreage buoyed down slightly by the pest attack in the region.

Overall, the area sown under castor in Kutch is higher by 11% from the last year. Buoyed down a little

by the crop losses due to rains in the Kutch talukas, the production is expected to be higher by 10%

over last year in the Kutch district.

3. Patan

Patan accounts for 15% of Gujarat’s castor area. The tehsil wise findings from the survey are

given below:

a. Patan: Patan Tehsil reported more than 15% increase in acreage due to favourable rainfall

and the yield is likely to increase by 3%. Villages such as Der, Kuwara and Vadu have

reported slight crop damage due to heavy rainfall.

b. Sidhpur: Sidhpur tehsil reported higher acreage as good

rainfall was received during monsoon this year. Because

of higher rainfall, around 12% increase in acreage is

reported. About 5% increase in yield is reported. Overall

an increase of 17% in castor production is expected in the

Sidhpur taluka.

c. Harij: In Harij Tehsil decline in both acreage and yield was

reported. The heavy rainfall received just after the castor

sowing damaged the crop significantly, because of which the yield in the tehsil is likely to

decline by around 10%. Acreage is also likely to be lower by around 9 to 12%.

. Higher acreage and yield in Sidhpur

Pest attack in Gandhidham

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d. Sami: In the Sami tehsil, the acreage is lower compared to last year by 6% and the yield is

expected to decline by more than 20%. Excess rainfall has resulted in lower acreage and

yield in most of the villages in the Sami tehsil.

The overall Castor acreage in Patan district increased by around 7-8% compared to last year mainly

due to good rainfall in all the four Tehsils. Although acreage reported significant increase, the yield

is likely to be affected slightly due to heavy rainfall damaging the crop in few tehsils of the Patan

District. Yield is likely to improve by just 3-4% and the overall production may be higher by 12%

compared to last year.

4. Mehsana

About 12% of Gujarat’s castor area comes under Mehsana. The major castor belt of Kadi,

Mehsana, Unjha, Vishnagar, and Kheralu were surveyed:

a. Kadi: 15% increase in area over last year was reported in Kadi due to shift from Guar, potato

and the pulses (Tur & Urad). Most of the castor sowing in the taluka was done after the

rains. Infact, the other crops in areas affected by rains too were replaced by castor after

rains. Yield is likely to be same as last year with a small area affected by pest. Overall the

castor production outlook for Kadi is positive with an expected increase of 10% in output.

b. Mehsana: An increase of 15% in

acreage over last year was reported in

Mehsana. The farmers shifted to

castor from guar and pulses. Guar

crop was damaged in the rains and so

the farmers replaced guar with

castor. With lower returns on pulses,

the heavy rains at the sowing time too

led farmers to opt for castor instead

of pulses as castor had fetched them a good realistaion. The production is expected to be

higher by 12% in this Taluka.

c. Unjha: In the Unjha tehsil, castor acreage was reported to be higher by 12%. Higher castor

prices last year, good rains and loss of other crops were reported as reason for increasing

the acreage. Although heavy rains may affect yield in some pockets, overall the yield is

expected to average out to the same as last year. The production outlook for Unjha is

positive with an expectation of 8% increase in production.

Good crop and higher acreage Mehsana

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d. Vishnagar and Kheralu: In the Kheralu district of Mehsana, the acreage is slightly lower by

6%. The reason given was that of heavy rains at the time of sowing. The yield also was

reported to be slightly lower which leads us to take a bearish view of production in this

region by at least 8%. In Vishnagar however both the area and yield averaged out to remain

unchanged from the last year.

Overall the acreage in Mehsana showed an increment over last year, to the tune of 13%. With no

major losses expected in yield and good crop condition in most pockets, the production outlook

in Mehsana is positive and the production may be higher over the previous year by 10%.

5. Ahmedabad

Ahmedabad accounts for 8% of the castor acreage in Gujarat. The major growing tehsils of

Mundal and Viramgam were covered in the survey.

a. Mundal: In Mundal district of Ahmedabad the area was reported to have decreased by 8%

and the yield is expected to be equal to last year or slightly lower. Most of the crop was

sown around mid-august, just after the floods. Overall the production outlook is slightly

negative for the sub-district.

b. Viramgam: In the Viramgam tehsil, castor acreage was reported to be higher by 10%. Higher

castor prices last year and shift away from pulses were reported as reasons for increasing

the acreage. Yield is expected to be slightly higher than last year. The production outlook

for Viramgam is positive with an expectation of 10% increase in production.

Overall acreage in Ahmedabad is similar to that of the last year. The yield may be equal to or slightly

higher due to good rains. The production is not expected to show major variation from the past year.

6. Surendranagar

Surendranagar has 8% of Gujarat’s castor area. In Surendranagar district most of the Castor

sowing was done in the month of August. Dasada and Dhanagdhra were surveyed.

a. Dasada: The tehsil reported slight decline of around 4 per cent in acreage due to

unfavourable weather (mostly cloudy weather affecting the growth of plants), crop

shifting (cotton preferred) and pest attacks. Rustamgad, Nagwala and Haripar reported

significant crop damage due to pest attacks. The yield in the tehsil may decline by 8%.

b. Dhagandhra: Tehsil Dhagandhra reported higher acreage as good rainfall was received in

the areas compared to last year. The yield is also likely to increase on back of favourable

rains. Higher acreage and yield were reported from villages like Malvan, Vavdi, Isodra and

Ghorithar. Last year most of the farmers had not opted for castor due to crop rotation.

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Castor acreage in the Surendranagar District increased by around 6% compared to past year as

good rainfall was received during monsoon. Last year most of the farmers did not opt for castor

as per our survey reports. Overall production can be higher by 7%.

Table: Summary of Survey Findings

District Tehsil Crop situation District production

outlook 2017 Area Yield

Banaskantha

Palanpur H H

Dhanera H L

Vav L L

Tharad H L

Deodar S S

Babar L S

Deesa L L

Kutch

Bhuj H H

Anjar H L

Bhachau L L

Gandhidham H L

Patan

Patan H H

Sidhpur H H

Harij L L

Sami L L

Ahmedabad Mundal L S

Viramgam H H

Mehsana

Kadi H L

Mehsana H S

Unjha H S

Vishnagar S S

Kheralu L L

Surendranagar Dasada L L

Dhagandhra H H

H Higher than 2016 L Lower than 2016 S No change

From detailed analysis of survey data, we conclude that the castor acreage in Gujarat this year

was higher by 13-14% due to good rains in the Castor growing belts and shift to castor from

crops like Guar and Pulses because of higher realisation from castor by farmers last year.

However, the floods in August caused damage to the immature crops and castor had to be re-

sown in several districts. The excess rains also incited pests in some talukas and this will affect

yield. The overall production outlook is that the castor production in Gujarat for the year 2017-

18 will be 9.18 lakh tonnes, 8% higher than the production of 8.5 lakh tonnes in 2016-17.

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NCML CASTOR PRODUCTION ESTIMATES

Production (in lakh tonnes)

STATES 2016-17* 2017-18**

Gujarat 8.5 9.18

Rajasthan 1.2 1.3

Andhra Pradesh 0.3 0.3

Telangana 0.3 0.3

Others 0.2 0.2

ALL INDIA 10.5 11.28

*SEA Estimates **NCML estimates based on crop survey for Gujarat, and secondary data analysis for Rajasthan and other states.

NCML CASTOR BALANCE SHEET

In Lakh Tonnes 2014-15 2015-16 2016-17E 2017-18 F

Beginning Stocks 7.5 6.8 7.15 4

Production 13.5 14.5 10.65 11.3

Imports 0 0 0 0

Total Supply 21 21.3 17.8 15.3

Consumption 14.2 14.15 13.8 13.5

Exports of seed 0 0 0 0

Total Demand 14.2 14.15 13.8 13.5

Ending stocks 6.8 7.15 4 1.8

Stock to use ratio 47.89% 50.53% 28.99% 13.33%

SOURCE: SEA, NCML Estimates

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PRICE OUTLOOK

Considering the current acreage and standing crop situation, the production is set to witness a

moderate jump in the coming season. In line with this, the castor seed prices which have started

showing signs of some near term depression are expected to take a deeper dip in the coming 3-4

months as the arrivals commence and peak.

Short term technical Indicators are also supporting the bearish scenario and are in line with the

fundamental factors of near term weakness in prices. We expect prices to lose another Rs 450-

600 from the current prices of around Rs 4380 (NCDEX Nov Futures) and test the Technical

support band of Rs 3780-3950. But the bearish situation is not expected to last for the medium

term.

As the arrivals of the new crop start to fizzle out, the larger fundamental situation of lower carry

over stock and tight stock to use ratio will take over the sentiments. Some price reversal will take

place around the month of May 2018 and the positivity is likely to continue till October, during

which the prices are expected to surge till the strong technical resistance of Rs 5200 is not tested.

Fresh leg of buying will emerge beyond Rs 5270 pushing prices higher, initially towards Rs 5580,

and then towards Rs 5950 on sustainable crack of Rs 5600.

Castorseed November Futures

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SURVEY SNAPS

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Reaearch Team

Basant Vaid Head: TCIG [email protected]

Sreedhar Nandam Vice President: SCM [email protected]

Suresh Solanki Assistant Manager: TCIG [email protected]

Kamna Malhotra Economist: TCIG [email protected]

Akash Jaiswal Research Analyst: TCIG [email protected]

Ansh Aggarwal Senior Officer: Trade Support [email protected]

Survey Team

Pravin Kumar Prajapati Chaudhary Manojkumar Jivabhai Varsan Makwana

Govind Kumar Prajapat Makwana Kirankumar Bhikalal Rashmin Thakore

Ganpat Prajapati Suthar Prakashbhai Dayabhai Navin Chavda

Shaharukh Mohammad Dalal Rathod Ganpatsinh Takhubha Arif Bubadiya

Ajay Rajput

For any research queries, contact us at [email protected]

Disclaimer:

This consultancy report has been prepared by National Collateral Management Services Limited (NCML) for the sole benefit of the

addressee. Neither the report nor any part of the report shall be provided to third parties without the written consent of NCML. Any

third party in possession of the report may not rely on its conclusions without the written consent of NCML. NCML has exercised

reasonable care and skill in preparation of this consultancy report but has not independently verified information provided by others.

No other warranty, express or implied, is made in relation to this report. Therefore, NCML assumes no liability for any loss resulting

from errors, omissions or misrepresentations made by others. Any recommendations, opinions and findings stated in this report are

based on circumstances and facts as they existed at the time of preparation of this report. Any change in circumstances and facts on

which this report is based may adversely affect any recommendations, opinions or findings contained in this report.

© National Collateral Management Services Limited (NCML) 2017

Documents

NCoMM Crop Survey Report - NCML · CASTOR CROP SURVEY 2017-2018 NCoMM Crop Survey Report zzyy 24th October 2017 ` CASTOR CROP SURVEY 2017-2018 BACKDROP Castor is a non-edible oilseed