Coriander Report: Outook Better This Year On Lower Crop, Improved Demand

MUMBAI (Commoditiescontrol) – Coriander prices during the last couple of years were under great pressure due to decent production, higher imports and decreased market share in in the international market, but this might not be the case this marketing year MY 2018-19 (Feb-Jan) due to estimate of sharp drop in production and prospects of some better export amid lower price. Coriander is currently trading in the spot market at nearly 2013 level.



Coriander Production
India’s coriander production this season MY 2018-19 is expected to drop 44.57% at 2.4 lakh tonnes year-on-year due to decreased sowing as farmers have shifted to other remunerative crops like Chana, Cumin, Garlic, etc.



Coriander has not provided desired returns to farmers in the last couple of years and thus prompted them to look for better alternatives, which has been reflected in sowing this season.

According to recently concluded seminar (Feb 23-24) called by Federation of Indian Spice & Stakeholders (FISS) the estimated area under Coriander during this year 2017-18 was pegged at 2.76 lakh hectares (includes Rajasthan, Madhya Pradesh and Gujarat). These 3 states cover nearly 80% of total area in the country (as per 2016-17 sowing data), which means if we add remaining 20% in 2.76 lakh tonnes than the estimates total area could be around 3.31 lakh tonnes for 2017-18. Acreage under coriander during 2016-17 was estimated at 6.62 lakh hectares, according to Indian Spices Board.

The agriculture department on time to time release coriander advance estimate, but the industry don’t rely on them as they believe that government production data is overstated and thus they mostly rely on data produced by well-known people in the industry, however there is doubt over authenticity about the such data.

Coriander Import-Export
Coriander import in the country over the years have increased gradually due to ample availability of the commodity in the international market at very competitive rates resulting steady decline in export (see chart below)

Major Export Destination: Malaysia, U.A.E, U.K, Saudi Arabia & South Africa
Major Import Destination: Bulgaria, Ukraine, Russia

Export of coriander this season is expected better than recent years as domestic prices are around competitive level and may help to restrict import.



Supply-Demand
The supply-demand number are well balanced thanks to higher opening stocks, but lower crop this season with expected rise in export likely to push down MY 2018-19 ending stocks to multi-year low level.


Source: 2016-17 - 2017-18- 2018-19 Trade Estimate

Coriander prices so far this season MY 2018-19, started from February, was under pressure despite of lower production as higher carry-over stocks and new crop supply has weighed on prices. Further demand was also not very great as stockists are holding previous year’s crop in bulk quantity, which didn’t sell by them to avoid loss as it was procured at higher rates.

Price Outlook
Coriander price in the near term may trade steady with negative bias due to new crop supply pressure against slow demand, but downside is expected to be limited supported by lower crop and drop in ending stock to multi-year low. However, one should keep a close eye on import-export market as well, as prices in recent years was under pressure due to higher import.

Technical Outlook
Technical: Dhaniya Kota Spot: Breakout Above 5700 Is Essential


The 55VA is below 89 VA and price is above 55 VA. Current price is in between the 2 averages as can be seen from the chart. Sideways movement between the averages is being witnessed. Near term rise can resume on sustained rise above 5700.

Once the uptrend starts by sustaining above 89 VA, the rise can extend to 6450 at least and may extend to 7277. Down move will resume on fall below 5330. Minor correction is possible before moving higher above 5700.

Conclusion
Minor correction is likely unless immediate Breakout above 5700 is witnessed.