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Last Updated : Jun 14, 2019 11:15 AM IST | Source: Moneycontrol.com

As stocks dwindle, downside in castor seed seems limited: Anand Rathi

The market is quite optimistic about castor sowing in the forthcoming season,but the new crop is six months away

Moneycontrol Contributor @moneycontrolcom
Representative Image
Representative Image

Vedika Narvekar

After falling consistently since the beginning of the month, prices of most agricultural commodities rebounded on June 11. Despite a delay in the onset of the south-west monsoon, markets are optimistic that kharif sowing would begin on time.

The private weather agency, Skymet, reports that, for the first 10 days of the month, the cumulative deficiency has risen to 46 percent, taking into account region-wise pre-monsoon deficiencies for that period.

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Northwest India is 40 percent short, while the deficiency in one of the rainiest regions, Central India, is the most, at 66 percent. Thus, responding to the weak monsoon progress, prices of kharif and rabi commodities rose significantly from a one-month low.

In soybean, however, only a thin recovery was seen. With the onset of the monsoon, soybean prices generally decline and the fall continues as long as the monsoon advance over the land mass and rainfall distribution is favourable.

In fact, any price rise arising from the present weak monsoon phase would be short-lived, and pressure on prices might again pile up once rainfall increases. Most weather models suggest a more normal monsoon from July. Thus, subsequent spells of rain would raise prospects of a good yield.

Cotton acreage may be slightly lower this season, particularly in Maharashtra, where farmers might prefer soybean to the fibre crop. But, expectations of good rainfall in the later months are upbeat. Accordingly, we don't see any major movement either side in cotton prices.

For prices of rabi commodities, the sentiment is mostly positive as physical supplies have started dwindling. In fact, a rally is due in most rabi commodities, including mustard, chana, coriander and jeera. Supplies of chana and coriander may be squeezed due to lower output in the current season, while jeera would be firm due to robust exports for the second year in a row. A bumper mustard crop has been seen this season, and crushing is on in full swing amid hopes of meal exports. Thus, despite greater output, prices of mustard are likely to be firm.

The market is quite optimistic about castor sowing in the forthcoming season,i.e., 2019-20. But, castor oil exports have hit current season' stocks. The new crop would be available only after six months. Thus, any downside in castor seed seems to be restricted while there are good prospects of an upside.

The author is Research Analyst- Agro Commodities at Anand Rathi Shares & Stock Brokers.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Jun 14, 2019 11:15 am
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