Weekly: Spot Red Chilli Gains Most In Spices Complex; Coriander Major Loser

MUMBAI (Commoditiescontrol) - Red chilli performed better in spices complex during the week ended Friday followed by marginal gain was observed in Turmeric and Jeera. Coriander and Black Pepper prices edged lower at their respective benchmark market.



Red Chilli
Red chilli price at the benchmark Guntur market of Andhra Pradesh during the week rose 3-month high at Rs 5,214/100kg thanks to better export demand supported by improved domestic inquiries. The supply of red chilli in the market is largely consumed by overseas buyers, mainly by China. Some good demand was observed by the end of the week by domestic buyers.

Chinese buyer’s presence in the market since last one month has provided underlying support to Red Chilli prices. They are buying actively since red chilli prices are over 60% lower comapred with last year's level. Earlier domestic demand was said to be slow, but has shown improvement on Thursday and Friday.

Chinese buyers are sourcing Teja variety between Rs 7,000-7,500/100kg, a local source claimed.

Red chilli prices are still at very attractive level and with festival season ahead there could be good demand from local buyers as they are likely to procure in large quantity to meet demand.

Red chilli has been sown in 3,000 hectares as on July 19 against 7,000 hectares same period a year ago. The normal area in the state pegged at 1.25 lakh hectares. The state agriculture department has set target area of 1.35 lakh hectares for kharif 2016-17.

Acreage in Telangana as on July 19 stood lower at 1,000 hectares versus 2,000 hectares corresponding period previous year. The normal area in the area is 68,000 hectares.

Red chilli prices in the coming weeks like to perform well due to declining supply month-on-month (see chart). The lower supplies in the spot market in the recent months was due to farmers reluctance to sell their produce due to lower rates followed by slow buying by local and upcountry buyers. Arrivals in June month has plunged sharply mainly due to lackluster demand due to confusion among trade related to new tax regime Goods & Services Tax (GST).

Turmeric
Turmeric recorded modest gain during the week. Turmeric prices started the week better, but with demand fading at the higher level with profit booking on futures led some correction in the spot market as well.

Earlier last week buyers were very much active, but were hesitant during the week mainly due to higher rates as prices jumped over 40% since June making Turmeric little uncompetitive. Export demand is not very encouraging either at present.

Some more correction in Turmeric can't be ruled out due to good sowing numbers released by Andhra Pradesh and Telangana. According to Andhra Pradesh agriculture ministry, the yellow spice as on July 19 has been sown in 8,000 hectares versus 0.04 lakh hectares normal area of same period previous year. Andhra Pradesh agri department has set target of 20,000 hectares for kharif 2016-17 season.

In Telangana, the sowing of turmeric as on July 19 stood at 33,000 hectares compared with 28,000 hectares. The normal area in the state under turmeric is 47,000 hectares.

The sowing data is better than market expectations as they have pegged it to decline this season amid lower rates. Farmers are likely to increase acreage under turmeric after sharp rally in turmeric prices in the last one and half month. However much could be said only by mid-August as sowing will be completed by that time, said traders.

According to arrivals data compiled by commoditiescontrol.com, the benchmark Nizamabad market received 12.19 lakh bags of turmeric so far since March 2017.

Turmeric for August delivery dropped 4.62% at 7,162/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX). The contract during the week traded between Rs 7,172 to Rs 7,820. Open interest and volume of the contract also declined gradually with price indicating some more correction ahead.

Jeera
Jeera ended the weak tad up at 19,467/100kg at the benchmark Unjha market of Gujarat. Activity in the spot market this week was subdued mainly due to weak cues from futures. Turmeric futures earlier last week made all time high of 20,145, but thereafter receded on profit booking and sluggish spot market.

Though activity in the market was slightly on the lower side during the week, but market activity and prices both are likely to recover due to bullish fundamentals amid lower than expected crop followed by thin stocks left with farmers.

Jeera production was earlier during the start of season was pegged more than 55 lakh bags (55kg each), which now industry people have pegged at around 45 lakh bags. The cut in production estimates was mainly due to poor yield, which was also reflected in supplies.

Turkey is offering cumin at $2,900 per tonne, which is $100 less than the Indian price, though the quantity on offer is much lower than that offered by India, which continues to be a major cumin supplier to the world market.

Cumin exports from the country rose 22 per cent year-on-year in volume to 1,19,000 tonnes and 28 per cent in value to 1,963 crores in 2016-17.

"Given the demand and shortfall in crop, local prices may touch Rs 230-240 per kg by Diwali," according to traders.

NCDEX August futures closed this week loss of 1.19% at Rs 19,455/100kg. The contract during the week hovered between Rs 19,630 to Rs 20,135. Open interest and volume declined a tad during the week.

According to trade analyst, Jeera will face some resistance at the higher level, but fundamentals being strong, it is likely accelerated in the coming months.

Coriander
Coriander declined 2.43% at Rs 5,166/100kg at the key Kota market of Rajasthan during the week amid lackluster domestic demand followed by bearish futures market. Activity in the market was lackluster as south Indian buyers were on the sideline. Coriander demand and arrivals usually remain on the lower side during monsoon season, but improves with festival demand starts from August.

Though demand is not very encouraging for Coriander at present, but likely gain momentum by mid next month ahead of festival season. The main concern is export demand. India turned out net buyer of Coriander in the couple of years due to cheap availability.

Coriander prices may improve incase export demand for Coriander improves, otherwise prices will be in a tight range ahead.

Meanwhile, NCDEX August delivery Coriander dropped 1.54% at Rs 4,972/100kg this week. The subdued cues from spot market prompted speculators to increase bearish bets on the futures market. Volume was uneven during the week with negative bias, whereas open interest declined in the contract. Coriander futures near term outlook is uncertain until it break resistance of 5,190 level, said analyst.

Black Pepper
Black pepper prices continued its bearish trend at the Kochi market. It fell 1.96% at Rs 49,990/100kg during the week ended Friday following increased availability of cheap imported pepper in the main trading centres in the country.

Karnataka based north Indian dealers were quoted as saying that the prices might fall to below Rs 400 a kg as cheap imported pepper is flooding the markets. In fact, in one year the prices have plummeted by over Rs220 a kg for the Malabar Garbled pepper.

Indian parity in the international markets was at $8,000 a tonne cf for Europe and $8,250 a tonne cf for USA.

India's pepper imports from Vietnam are estimated to have risen 106% on year in June to 2,010 tonne versus 975 tonne same period a year ago, according to industry sources.

Vietnamese pepper is available at competitive rates compared with domestic pepper and also, it's quality is said be much better.

In June, the average export price of black pepper from Vietnam was $5,388 per tonne, while that of white pepper was $8,013. During Jan-Jun, India imported around 7,355 tonne pepper from Vietnam compared with 7,685 tonne same period last year.

Note: Data Source: Price: NCDEX | Arrivals: Commoditiescontrol

(By Commoditiescontrol Bureau; +91-22-40015533)