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Key Highlights

The southwest monsoon, which started on early June, has turned erratic. In the last two weeks, rainfall over the country has been 35% below normal, dragging down the cumulative rainfall this monsoon season to 92% of the long period average which is classified as 'below normal'. Private weather forecaster Skymet also predicted southwest monsoon for the Jun-Sep period at 94% of the long-period average, lower than its earlier prediction of 103%.

Farmers have sown crops across 104.4 mln ha so far in the 2021-22 (Jul-Jun) kharif season, down 1.6% from a year ago. Farmers have sown castor across 461,000 ha in the 2021-22 (Jul-Jun) season, down by 0.6 % from a year ago, according to farm ministry

India's castor meal exports in July fell by 2% at 29,940 tn, compared with 30,530 tn a month ago, according to data by The Solvent Extractors Association of India.

India's exports of castor oil rose by 50.9% on year to 81,759 tn in June, an official with The SEA of India. Exports were at 54,179 tn during the same period last year

Castor seed production in the country is expected to fall to 1.78 mln tn in 2020-21 (Jul-Jun) from the previous estimate of 1.90 mln tn, according to the third survey commissioned by The Solvent Extractors' Association of India. Production of castor seed in the country is likely to fall by 2.6% on year to 1.90 mln tn in 2020-21 (Jul-Jun), according to a survey conducted by the Solvent Extractors' Association of India. The production was pegged at 1.95 mln tn last year. The farm ministry has pegged castor seed production at 1.72 mln tn, down from 1.85 mln tn last year.

According to the first advance estimates for 2020-21 (Jul-Jun), castor seed output is seen at 1.724 mln tn compared with 1.8 mln tn in the fourth advance estimates for 2019-20, according to the data released by the farm ministry. While, according to traders, crop is seen at 1.5-1.6 mln tn.

Commentary on Castor seed

September NCDEX castor seed prices traded firm in the last week on back of strong demand for castor oil in the spot market. India's exports for castor oil rose by 50.9% on year to 81,759 tn in June, according to SEA. Moreover, concerns over weak south west monsoon in the key growing regions resulted in lower acreage. Higher demand for castor oil is also supporting the prices. According to market sources, higher demand for castor oil and along with concern over lower carry over stocks is likely to create a supply shortage. At present, progress of sowing, meal demand and rise in export - price parity are the major factors to be watched on in the near term.

Technical chart– NCDEX Sep Castor

Line Chart-Price & 15 day SMA

Technical view

Major trend remains positive as long as prices stays above the technical support of 5820 levels. As long as prices stays above the same could see more upside moves targeting 6300/6500 or even higher to 7000 levels. Meanwhile, weekly RSI (14) is treading higher at 78 in overbought zone signalling some profit booking. Hence, unable to sustain above 5820 could see some profit booking towards 5510/5320 or even lower to 5180 levels.

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