Calendar spreads provide an opportunity to exploit any relative miss-pricing between various contracts of same commodity.
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Castor seed is produced mainly in 3 states in India - Gujarat, Rajasthan and Andhra Pradesh. After extraction from seed, the oil produced is mainly exported and its cake is used as manure which is used in tea gardens. The oil is used to make lubricants and also used for medical purpose.
Apart from the Southern areas, castor seed is produced in all parts of Gujarat. During 2006-07, around 4.90 lakh ton castor seed was produced here which increased to 6.50 lakh ton in 2007-08. As per latest estimates, production is expected to remain higher than this figure (at ~ 8 lakh tons) as farmers are getting remunerative price for their produce. This encouraged them to take more interest for its cultivation. Castor seed is cultivated in July to August and arrivals start during December. However, its arrival continues the whole year as its cycle is of nearly 8 months period.
Rajasthan is the second largest castor seed producing state in India. During 2006-07, nearly 1.40 lakh ton castor was produced here which remained same during 2007-08. However, the sowing area has moved up this year as per reports. The production this year is expected higher at 1.70 lakh tons. Castor seed is cultivated in July to August and arrivals start during December.
Andhra Pradesh is the third largest castor seed producing state in India. During 2006-07, around 1.10 lakh ton castor seed was produced here which reduced to nearly 90 thousand ton in 2007-08. In 2008-09, production figure is expected to decrease (to ~70000 tons). This is mainly attributed to insufficient rains. Here, arrival starts in September. And the sowing time is May – June. It is an 8 month cycle crop.
Around 30,000 tons castor seed is also produced in Maharashtra and some other states. India is the only exporter of castor oil. However, some other countries are also produces it but that fulfills only their domestic demand.
Total production in India was 7.80 lakh ton during 2006-07 which increased to nearly 9.10 lakh ton during 2007-08. As per sources, total Indian production in 2008-09 is expected to touch 10.70 lakh ton figure. Moreover, export figure is also likely to remain high this year. Trading activities are expected to increase in castor oil in the near future. The export demand is expected to pick up.