MOMENTUM OF TIME. Castor Oil Consumption Outlook and Emerging Trend- India

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1 MOMENTUM OF TIME Castor Oil Consumption Outlook and Emerging Trend- India Presented by : Atul Chaturvedi President, The Solvent Extractors Association of India & Director Adani Wilmar Limited At Global Castor Conference th February, 2018, Ahmedabad, Gujarat 1

2 2 Global Economic Scenario MOMENTUM GDP Growth OF Percent TIME Change YoY World Advanced Economies US Europe Emerging Market & Developing Economies China India Source : World Economic Outlook - Jan 2018, IMF The global recovery has strengthened Reduced Corporate Tax in US to stimulate activity in near-term Euro Area Germany, Italy & Netherlands reflected stronger momentum. Growth in Emerging & Developing Europe exceeded 5% Growth is expected to moderate gradually in China Despite a correction in 2017, India is still a bright spot in longer term

3 Indian Economic Scenario MOMENTUM OF TIME Stable political Environment Strong & Decisive Government Digitalization expected to create efficiency. However still not stabilized. Tax Reform (GST) expected to streamline the system - still work in process. Indian Rupee range bound around per $ Interest rate around 8 to 9 % Stock Markets are buoyant-post Budget major correction has taken place. CPI Inflation seen at 5.07% during January Fiscal Deficit 3.5 % of GDP for year ending March 2018 Due to increased crude prices, Current Account Deficit has increased to around 2% of GDP Every 10$ a barrel jump in oil price brings down GDP by % and worsens CAD by $9-10 bln 3

4 Agriculture in India MOMENTUM OF TIME Over 58% of Rural households depends on Agriculture as primary source of livelihood Agriculture as a sector contributes 18 percent ofthe GDP Agri GDP growth hovering around 2% Agro isnow the focus ofpolicy Makers. Rural distress endemic Total production is estimated at an all-time high of Food grain : 275mmt Pulses : mmt Oil seeds : 37.5 mmt (incl. cotton & copra) Indian farmer s responsiveness to price signals has increased over the years.pulses is a case in point. Government s intention of formalising MSP structure may also affect sowing patterns. Castor prices remained subdued which discouraged the Indian farmers and lost acreage to competing crops during last two years 4

5 1600 MOMENTUM Castor seed Sowing Area OF TIME Others AP/Telangana Rajasthan Gujarat Castor seed sowing during last two years has been lowest in last 8 years This is majorly contributed by lower price realisation by farmers during recent years and also due to good & timely monsoon We estimate a crop of 1.35 mmt We may hear more about the crop estimation later in the day

6 MOMENTUM Castor Oil Export Trend OF TIME Annunalised growth of Castor Oil Exports from India is 7.5% since last 10 years Castor oil exports during increased only by 2.5% due to slowdown of Sebacic production during Nov16-Jan 17 which got compensated by increased imports during current year. 6

7 MOMENTUM Castor Oil Export Trend OF TIME 7 Imports by Europe & US is steadily increasing at around 5% annually Imports by China growing little faster than other destinations Deviation in quantities to China during & was due to relocation of stocks through Malaysia

8 Particulars P Castor seed Crop Carry in from previous year Seed available for crushing Castor oil available Castor Balance sheet MOMENTUM OF TIME Quantity in 000 MT Tight demand supply scenario was postponed by one year due to unexpected higher opening stock during Castor oil Export Castor Derivatives Domestic consumption Total Disappearance Carry forward (oil form) Carry forward (seed form) We estimate an export demand of 650kt of Castor oil during 2018 Prices have to rise to cater to increasing demand and decreasing availability.

9 9 Food for Thought MOMENTUM OF TIME CASTOR BALANCESHEET BASIS GOVERNMENT CROP ESTIMATE Particulars Castor seed Crop Carry in from previous year Seed available for crushing Castor oil available Castor oil Export Castor Derivatives Exports Domestic consumption Total Disappearance Carry forward (oil form) Carry forward (seed form) CASTOR BALANCESHEET BASIS NEILSON CROP ESTIMATE Particulars Castor seed Crop Carry in from previous year Seed available for crushing Castor oil available Castor oil Export Castor Derivatives Exports Domestic consumption Total Disappearance Carry forward (oil form) Carry forward (seed form) Government crop estimation seems more closer to reality than Neilson

10 Food for Thought MOMENTUM OF TIME Balance sheet Basis Government Numbers Our analysis basis Government Numbers shows Carry-in of 1.3 mmt as on 1 st January 2018 First Advance Estimate of Castor Crop by Government for is mmt Basis above, total availability would be 2.7 mmt Total expected disappearance of 1.85 mmt during 2018 would leave a carry-out of 0.85 mmt This is totally at Variance with Trade Estimates 10

11 MOMENTUM OF TIME Mr. Atul Chaturvedi, President The Solvent Extractors Association of India A Premier Association of Vegetable Oil Industry & Trade in India ISO 9001:2015 Organisation 142, Jolly Maker Chambers No. II, 14 th Floor, 225, Nariman Point, Mumbai Tel: (+91-22) , Fax.: (+91-22) solvent@mtnl.net.in, Website: 11