Transcript Castor Developments in Asia - International Castor Oil Association

Castor Developments in Asia
ICOA General Meeting
San Diego, 18th May 2006
A.K. Mitra – Hindustan Lever Ltd.
Asia in Castor
• Dominant producer
o India + China produces 450,000 T Oil out of 500,000 T global
total (90%)
• Largest consumer
o Consumes 250,000 T Oil equivalent to 50% of global total
• Meets world demand of Castor oil and derivatives
o Exports 200,000 T, fully covering Europe + North America needs
India produces close to 400,000 T oil
and exports 300,000 T as Oil + Derivatives
Asia in Castor
• Rapid economic growth
o China and India growing at fast rate (8% to 10% GDP growth)
o Manufacturing growth at even higher rate
o Internal consumption for Castor products will match this growth
• Reviewing exports portfolio
o Stress on value-added products
• Castor yields/production
o India has overall average yield >1000 Kg/ha, poised to grow
o Area under cultivation to compete with other crops based on expected
returns
o Commodity exchanges rapidly developing and disseminating relevant
information
o China yields/areas stagnant to falling
India and Castor
• India “ideal” for Castor
o
o
o
o
Higher yield than elsewhere, still growing (capable R&D)
Lower labour cost
Favourable agro-climatic condition
Adequate area available for Castor cultivation
• Developing fast
o Emerging as manufacturing hub for a host of goods
o Abundance of entrepreneurial and technical capabilities
o Focusing on value addition and export of finished goods
• Impact on Castor
o Internal consumption on the rise – stronger sustenance for inputs
o Added thrust on Derivatives export
o International oil demand to compete with domestic
Castor Seed Prodn. - Asia
In ‘000 MT
2006
2005
India
900
820
China
125
100
Others
10
10
1035
930
10% higher crop : adequate to meet world demand pursuant to 4.5% GDP growth
Oil balance 2005 - Asia
In ‘000 MT
Consumption
Availability
Surplus/
(Deficit)
India
100
400
300
China
100
55
(45)
Others
55
5
(50)
Total
255
460
205
Adequate to meet demand from rest of the world
Deriv. balance 2005 - Asia
In ‘000 MT
Consumption
Availability
Surplus/
(Deficit)
India
15
65
50
China
25
55
30
Others
40
30
(10)
Total
80
150
70
Adequate to meet demand from rest of the world
Fsg fob Kandla (Rs/T)
55000
Max
50000
Min
Avg
Rs / T
45000
40000
35000
30000
25000
MQ 03
JQ 03
SQ 03
DQ 03
MQ 04
JQ 04
SQ 04
DQ 04
MQ 05
JQ 05
SQ 05
DQ 05
MQ 06
Prices have fallen monotonically from SQ ’04 to DQ ’05; five quarters in a row
• Total fall of > Rs 10,500/T equivalent to 26%
• Good crop in ’05 and ’06; discounted in prices
• Target plus scheme; had impacted prices by upto $35/T (~5%)
Recent developments
• Target plus scheme abolished
• Forecast of insufficient monsoon
• Firming up of prices
o ~2% up in MQ ’06 after 5 qtr fall
o June futures @ 2% prem. (eff. 4.5%)
o Aug futures @ 10% prem. (eff. 3.3%)
Volatility
Range as %
of Average
MQ
JQ
SQ
DQ
2003
18
20
27
16
2004
13
16
23
17
2005
8
8
15
7
2006
9
• Qtrly fluctuation significantly down from 2005
• SQ phenomenon interesting; even this has come down significantly
• For a commodity, 8% to 15% levels is remarkably low
Volatility
Possible reasons for reduced volatility since 2005
• SEA crop survey in 2005 and 2006
• Wide dissemination of survey results
• “information” & “transparency” eliminate major seeds of
“speculation”
Reduction in horizon/extent of buying forward
Can ICOA help promote these further?
• Participation in crop survey
• Fine tune demand forecast and disseminate widely
Summary
• Asia (India) well placed to serve Castor world; both
quantity and price wise
• Expect growth in value-added castor derivatives export
with focus on manufacturing
• After softening over 5 quarters, Castor prices firming up
• Supply side measures significantly reduce volatility; a
positive trend, to be nurtured
• ICOA role in promoting information dissemination to
further “choke” speculation
Global Oil & Derivative Balance 2006 : a draft working
Overall as Oil
(in ‘000T)
Derivatives
Avail.
Cons.
Bal.
Avail.
Cons.
Bal.
India
400
100
300
65
12
53
China
55
100
(45)
55
25
30
Japan
30
(30)
17
27
(10)
Mid East
10
(10)
5
(5)
5
15
(10)
15
10
5
Total Asia
460
255
205
152
79
73
Brazil + South Am
43
30
13
30
15
15
Europe
140
(140)
10
70
(60)
USA, North Am
70
(70)
10
35
(25)
3
(3)
APAC excl Japan
Other non Asia
5
3
2
Total non Asia
48
243
(195)
50
123
(73)
Total
508
498
10
202
202
0
Thank You