MUMBAI (Commoditiescontrol) - Turmeric, Cumin and Chilli traded higher in the spot market due to improved demand at the lower level, whereas coriander and pepper remained under pressure due to bearish outlook.
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Turmeric
Turmeric rose most in the spices this week supported by some improved demand at the lower level tracking recovery on futures. Turmeric price in the last 1 month dropped more than 7 percent and nearly 25 percent in 3-month. Lower price level attracted some fresh buying from upcountry buyers to fulfill their demand ahead of Ramzan.
Supply of turmeric in the spot market is thin due to farmer’s reluctance to sell their produce at the lower level. Farmers are anxious due to sharp losses in turmeric prices and expecting some revival ahead of festival season.
Export demand is thin in turmeric at present due to falling rates and strength in rupee, but likely to increase from Gulf countries due to Ramzan.
India turmeric exports during April-February (2016-17) rose 37.36 percent at 1.10 lakh tonnes from 0.80 lakh tonnes same period a year ago. Bangladesh (17,628.72), Iran (14,214.60), Malaysia (5,661.97), UAE (7,330.18) and USA (6,089.39) were among the top five buyers of Indian turmeric.
On futures turmeric for June delivery gained 4.20% at 5,698/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX). The contract hovered in the range of Rs 5,510 to Rs 5,730 this week. Volume decreased 64.93% percent, whereas open interest increased by 45% is an indication of built up of long positions.
Fundamentally upside is limited in turmeric mainly due to huge stocks with farmers due to estimation of higher production this season.
Cuminseed
Lower supply, firm futures and improved demand helped cumin seed prices to trade better at the key Unjha market this week. Earlier this week some selling pressure was observed, by fresh inquiries at the lower range pushed prices again in positive territory.
Cumin seed prices during the last few week was under pressure mainly due to higher prices promoted domestic and overseas buyers to hold their buying for a while. The strength in India rupee has also weighed on exporters sentiments and firm rupee make export costlier.
According to trade sources "Cumin seed crop is expected to be much lower than what was estimated earlier tracking poor supplies in the spot markets." Earlier few month ago an industry body in a conference estimated cumin seed crop at 58 lakh bags (55kg each), but now it seems that crop could be around 45-48 lakh bags."
Carry over from previous crop was expected between 5-7 lakh bags, which took total availability in the range of 50-55 lakh bags. The country is likely to export at least 20 lakh bags, whereas estimated to consume 30 lakh bags by domestic markets, which means that supply-demand is going to be tight ahead.
Meanwhile exports of cumin seed this season was better due to good demand from international buyers. India shipped 32.93% more cumin seed during April to February 2016-17 at 1.06 lakh tonnes against 0.80 lakh tonnes a year ago. Vietnam (32,657.60), Bangladesh (10,016.31), USA (7,978.20), UAE (7,335.44) and Brazil (4,563.50) were the main buyers.
The June delivery cumin seed on NCDEX ended this week tad up 0.40% at 18,545/100kg after hovering in the range of Rs 18,215 to Rs 18,760. Open interest rose by more than 26 percent, but volume dropped sharply 54.58%.
Red Chilli
Red chilli though has witnessed sharp selling pressure since new crop, but managed to rise by 1.27% this week due to some low-level buying. Red chilli was expected to be beaten most in the spices complex this year due to higher crop estimates against slow demand.
"New crop is much better than last year and expected to be around 16 lakh tonnes (3.95 crore bags of 40kg each) in major producing states," According to Ashok Dattani, a red chilli trader based in Mumbai.
The country has produced 13.89 lakh tonnes of red chilli in 2015-16, according to third advance estimate data available on National Horticulture Board website.
Red chilli exports demand was said to be slow in the recent month mainly due to falling prices and strength in Indian currency, but likely to improve ahead.
India exports of red chilli during April-February rose 8.92% at 3.35 lakh tonnes versus 3.08 lakh tonnes a year ago.
Red chilli prices already corrected sharply and any major downside now unlikely as it may prompt farmers to slow down selling stocks. However, a major portion of supplies has already arrived. Stockists bought red chilli heavily earlier with expectations of lower prices, but prices receded further incurring them losses. Warehouses are loaded with red chilli stocks in Guntur and nearby regions, according to trade sources.
Coriander
Coriander continued to perform negatively this week as well due to poor demand, however recovered well from the lows supported by poor arrivals in the spot markets.
Coriander supplies at the trading terminal has dropped significantly on Thursday and Friday due to farmer’s reluctance to offload their produce at the lower level.
According to traders "Coriander prices have already corrected sharply and downside now is very limited and thus some buyers are active to source the commodity on favorable risk-reward ratio."
This is the right time to buy coriander in the spot market, but buyers are hesitant at the same time due to huge volatility on futures as spot prices recovered from lows this week, but futures exhibited bearish tone.
Farmers are still holding a huge chunk of crop and thus any upside is limited in coriander. Traders expect farmers had liquidated nearly 40-50% of crop so far and 50-60% of crop is still left with them.
Coriander production this season 2016-17 dropped to 90 lakh bags (40kg each) against 100 lakh bags a year ago, but its huge carryover stocks that has created pressure on market, according to Ramganj-based trader.
Imports of coriander seed is on the rise in recent years. The volume of import increase to more than 43,562.93 tonnes in 2016/17 in first 11 months against 24,094.08 tonnes last year. India imports coriander mainly from Russia, Ukraine and Italy due to very competitive rates.
On the export front, India exports about 19,621.96 tonnes of coriander seeds in first 11 month of 2016/17 compared to 27,268.16 tonnes in the previous year for same period. The export volume of coriander seed was 40,100 tonnes in 2015/16.
The most-active June coriander fell as much as 2.57% at Rs 5,679/100kg on NCDEX. The contract moved in the range of Rs 5,610 to Rs 6,024 during the week. Volume plunged sharply by more than 78 percent, whereas open interest moved up by 19.48%. Liquidity in the contract has dropped, but rising open interest with weak prices is an indicating bearish tone ahead.
Black Pepper
Black pepper (Garbled) lost nearly 1 percent during the week following reports of an upsurge in supply of pepper at lower rates. Availability of imported pepper at low prices is also attributed to the decline in spot prices.
In addition to the availability of Sri Lankan pepper imported by paying 8 per cent duty rumors are also in the air that given the much lower prices offered for Vietnam pepper, it might also land in the Indian markets after paying 54 per cent duty as it would be still competitive, they claimed.
Imported material from Sri Lanka was being offered at Rs 515-Rs 525 a kg, trade sources claimed. Vietnam was reportedly offering at $5,000 a tonne 550 GL pepper and after paying 54 per cent duty it could be sold on the Indian market at competitive rates, they pointed out.
Indian parity in the international markets was at $8,800 a tonne cf for Europe and $9,050 a tonne cf for USA.
(By Commoditiescontrol Bureau; +91-22-40015533)
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