Castor Seed Prices Explained

The international castor seed market witnessed price fluctuations as the demand for bio-based products varied globally. Additionally, the decreasing need from downstream sectors further influenced castor seed prices.

On the other side of the world, the commodity’s price remained stable in the Asia Pacific region as castor cultivation in India (the largest castor seed producer, accounting for over 60% – 70% of the global yield) exhibits positive trends, largely accommodating the steady Asian demand.

Similarly, the European region features the same market scenario as APAC (Asia Pacific). However, India’s export restriction on castor seed and oil further drove up their prices in Europe.

Why are castor seed prices fluctuating?

1. Supply and Demand Dynamics

The unpredictable nature of agricultural yields, particularly in response to weather conditions disrupts the balance between supply and demand, leading to castor seed price volatility. Additionally, major castor seed producers like India, Brazil, and China compete for market share, influencing global castor seed pricing strategies.

Furthermore, increasing demand for castor oil across various industries like cosmetics, pharmaceuticals, and lubricants put pressure on supply, leading to castor seed price hikes.

2. Supply Chain Disruptions

Bottlenecks in transportation and logistics infrastructure lengthened the efficient movement of castor seeds, causing price differences across different regions. For instance, the constant attacks on passing merchant vessels in the Red Sea aggravate freight fees. Also, the agricultural sector faces labor shortages in some key producing countries, potentially impacting production and spiking up castor seed prices.

3. Production Costs

Increasing costs of fertilizers, pesticides, and other agricultural inputs highly influence farmers’ profitability and potentially push castor seed prices higher. Adverse weather events and climate change take hold of crop yields, leading to reduced supply and fluctuation of castor seed prices.

Which variables impact the price of castor seed?

• Supply and Demand Dynamics
• Supply Chain Disruptions
• Production Costs
• Market Speculations
• Volatile Currency Exchange Rates

Where does castor seed come from?

The castor bean, with its spiky exterior and poisonous seed, looks unassuming. However, this plant holds the key ingredient for a remarkably versatile oil with countless applications across diverse industries.

Castor beans thrive in warm climates in a well-drained and sandy loam soil. The planting process begins with preparing the land by deep plowing and harrowing to create a fine tilth. Then, seeds are sown directly into the field, spaced approximately 2-3 feet apart.

Throughout the growing season, it requires regular watering and weeding to maintain optimal growth. Depending on the variety, the plant can reach a height of 10-15 feet, adorned with large and palm-like leaves.

Moreover, the distinctive spiky capsules begin to appear within 3-4 months, housing castor beans within.

Generally, harvesting occurs when the capsules turn brown and begin to split open. The entire plant is cut down and left to dry in the field for several days. Then, the capsules are threshed to separate the seeds from the chaff.

Castor oil extraction is called cold pressing. The seeds are crushed and pressed under high pressure, resulting in the separation of the oil from the solid residue. Then, the oil is further refined for various industrial applications.

1. Biodiesel: Castor oil is a promising feedstock for the production of biodiesel, another rich alternative for a clean and sustainable energy source.

2. Pharmaceuticals: Due to its unique properties, castor oil is used in various pharmaceutical products such as laxatives, gels, and ointments.

3. Lubricants: It possesses excellent lubrication properties, making it ideal for use in high-performance engines and industrial machinery.

4. Cosmetics: It’s a popular ingredient in soaps, lotions, and hair products due to its moisturizing and conditioning properties.

5. Paints and Coatings: Its derivatives are used in the production of paints and coatings, contributing to durability and brightness.

6. Plastics: Certain plastics are made with castor oil derivatives, offering improved flexibility and resistance to degradation.

Beyond the Bean: The castor plant offers even more benefits beyond its oil as its leaves are used as a natural fertilizer and the stems are utilized for making paper and furniture. Furthermore, the leftover from oil extraction serves as a valuable organic fertilizer and livestock feed.

What is the future price of castor seed?

Oil seed market analysts forecasted that castor seed prices will experience a significant price shift in the coming years as innovation is the major frontrunner of its future marketability.

Presently, Gujarat, India remains the dominant producer of castor seeds, accounting for over 65% of the global supply. While the current supply is deemed adequate, fluctuations in weather conditions and crop yields lead to castor seed price volatility. Additionally, the El Niño weather system is not yet over.

Here are the future price movers of castor seed:

1. Rising Demand – The global castor oil market is projected to grow steadily at a CAGR of 4-5% during the forecast period (2023-2030). This growth stems from the increasing demand from several industries such as pharmaceuticals, cosmetics, and lubricants.

2. Shifting Supply Dynamics – The current dominance of India in castor seed production is expected to face challenges due to factors like climate change and competition from other crops like soybean, linseed, and rapeseed.

3. Emerging Technologies – Innovations in castor oil extraction and processing lead to improved efficiency and reduced production costs. Thus, leading to more affordable castor seed prices.

Additionally, Casterra’s (an integrated castor cultivation solution Israeli company) announcement of an additional $2.2 million castor seed purchase orders for new African territories to revolutionize the production of sustainable biofuel will stir new investments and innovation in the industry.

Thus, the estimated castor seed price will be around $700 – $800 per ton by 2030. This represents an increase of 20-30% compared to the current price.