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Pratim Ranjan Bose

Triggered by fall in chilli, jeera, turmeric prices

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Kolkata Feb. 4 After a year-long all-pervasive bull run, the spices market may be headed for a slowdown in 2007. The slowdown may be triggered by a sharp drop in mirch or chilli prices followed by stagnation or marginal fall in prices of jeera and turmeric.

The bearish movements in parts of the masala (spices) basket may, however, be adequately offset by upward movements in pepper and cardamom, both of which are expected to remain bullish in the foreseeable future due to strong fundamentals.

All the five major spices moved up sharply during 2006. Pepper, jeera and chilli stole the show with nearly 100 per cent increase in prices. Cardamom was a close second with roughly 70 per cent rise.

Turmeric witnessed wide movements (Rs 1,700-2,800) during the year and is currently ruling at last year's level of little over Rs 2,000.

Price movements

Near term forward contracts on pepper are now ruling at over Rs 12,500 up from Rs 6,000-6,500 level in early 2006.

Chilli moved up from Rs 3,500-3,800 level at the beginning of last year to Rs 7,000-8,000 range in December and is now ruling at over Rs 6,600 on the spot market (forward contracts on chilli are not available before April).

Jeera that was ruling at Rs 5,600-6,000 level in early 2006 had shot up to Rs 10,000 level during the year and had closed at Rs 9,100 (February contract) on NCDEX on Saturday.

Correction seen in chilli

According to an analyst with Kotak CSL Research, chilli is headed for a "sharp drop" during next few weeks due to surplus crop outlook. The production in 2007 is expected to be 90-100 lakh tonne up by 30 per cent from the last year.

Analysts are unanimous that chilli prices are likely to hit Rs 3,500-3,800 in a month.

Kotak CSL does not have any crop outlook available for jeera Technical studies show that the commodity is "overpriced" and prices should come down. Mr Anuj Gaur of RR Commodities, however, believes that prices will overall be stable and a buy at the dip may prove profitable.

Softening is also expected in turmeric from the present level due to better crop outlook. The new crop is expected to arrive by February.

Pepper and cardamom

Market sources are, however, confident that strong demand and inadequate supply situation will push pepper once again to Rs 15,000 level. Cardamom may also get back to the Rs 500 per kg level touched in 2006.

More Stories on : Spices & Condiments | Commodity Markets

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