Coronavirus lays jeera low

Jeera (cumin seed) prices in spot markets saw a steep fall of over ₹1,500 per quintal or close to 10 per cent in a month. Trade sources said the sharp fall in the spice commodity is because of the coronavirus ourbreak in China, which is the largest buyer of the spice commodity from India.

Spot jeera prices on Thursday were quoted at around ₹14,500-14,600 per quintal at Unjha markets, which is sharply down from ₹16,062 quoted on January 15.

Four-year low

In futures, jeera prices hit a four-year low of ₹13,830 a quintal for March contract on NCDEX. The commodity had hit a lower level of ₹13,060 a quintal four years ago in January 2016.

“China is expected to buy about 50,000 tonnes this year on account of increased consumption. This year, the trade was excited because of our attractive prices and hoped that the Chinese demand would increase. The coronavirus definitely has caused a dent in demand. Usually, the Chinese visit personally to choose and verify quality of their order. But now, due to travel ban and virus fears, it is going to be challenging for them,” Sailesh Shah, Director, Jabs International, one of India’s largest spices exporters, told BusinessLine.

Higher output

Notably, favourable climatic conditions and improved water availability following good monsoon rains had brightened the prospects for jeera. Farmers in the top growing States of Rajasthan and Gujarat expected about 25-30 per cent higher yield leading to a larger crop this year. The official crop estimates are yet to arrive, but farmers believed that due to increased acreage and favourable climate, there was going to be a higher crop.

The sentiment has already impacted the prices, which was expected to consolidated around ₹15,500 a quintal. But the unexpected global health emergency of coronavirus impacted buying from China, causing a sharp decline in prices in the second half of last month. Jagdeep Garewal, director at Sethji Broking House Pvt Ltd in Ahmedabad, said consolidation in prices was expected amid the higher crop. “But there was no virus threat till early last month. Now that the largest buyer of cumin is facing this threat, there is an impact on prices, which will directly hit India's cumin exports.”

Commenting on the likelihood of further decline in prices, Garewal said there is “not likely to be any further decline in the prices from the current levels because prices have already hit the lowest levels in the past four years. Any further decline will only provide a buying opportunity for traders,” Garewal said.

Positive factors

Since India being the only and major supplier for cumin seed to China, there are thin prospects that China may look to source the spice from other countries. In such a scenario, exporters believe that the Chinese purchases may only get delayed and will spring up once the coronavirus threat disappears.

“Cumin seed is a commodity which can't be substituted by any other product. Also, India being the largest grower, China has to depend on us for it. They can't look for other suppliers nor can they locally grow it overnight to meet their requirement,” Shah of Jabs said.

Meanwhile, all eyes are on the statement by the Chinese government on the possible extension of the holiday and the factual position on the spread of the coronavirus.