Deficient monsoon triggers sharp rally in jeera prices

Rutam Vora/Vishwanath Kulkarni Ahmedabad/Bengaluru | Updated on August 25, 2021

Jeera prices have already started consolidating in anticipation of a good crop   -  BusinessLine

Rates up ₹2,000 per quintal in less than a month

Amid fears of a deficient monsoon, a sharp rally has spiced up jeera (cumin seed) prices in the past one month.

Jeera is a rabi crop grown in Rajasthan and Gujarat, and the soil moisture left by good monsoon rains holds the key for the good productivity of the seed spices crop.

Gujarat, the largest grower of the spice seed, has reported 59 per cent deficient rainfall till August 24. The key growing region of North Gujarat has 62 per cent rainfall deficiency. Similarly, major jeera growing districts, including Jaisalmer and Barmer, face a rainfall deficit, triggering drought-like situation in western Rajasthan.

At the Unjha market, spot jeera prices have surged by ₹2,000 or 15 per cent in less than a month from ₹13,620 a quintal on July 30 to ₹15,400 on August 24.

The NCDEX jeera contract for September delivery were quoted at ₹15,470 a quintal in the futures market, while far-month contracts for October and November delivery was quoted at ₹15,740 and ₹15,935, respectively, on Tuesday, indicating a firm outlook for the price.

So far this year, prices have gained by 20 per cent since January 2021 levels of ₹12,960.

Delayed monsoon drives speculation

Trader sources attributed the rally in prices to speculation as a result of delayed monsoon. The domestic demand is slow, export demand is limited.

"The trade is hand-to-mouth as everyone is closely watching the price movement. A lot of uncertainty is because of the erratic monsoon in growing regions. Current rates are the highest for this year, while we have no clue of what the price trend would be in next few weeks due to uncertain monsoon," said Vijay Joshi, from Vijay Exim, an exporter in Unjha.

Unjha market insiders noted that the price trend is speculative, and there could be a correction if there is a good spell of rain.

"We suspect the prices may correct immediately after a good spell of rain. Due to the delayed monsoon, there is a concern on the water availability for winter crops. A good spell of rain would bring some relief for farmers as well as cool down the prices too," said a trade source.

Arid zone crop

Jeera is a winter crop mainly grown in the arid zones of Rajasthan and parts of Gujarat. The residual soil moisture left by the good spell of monsoon rains play a crucial role in the productivity of the seed spices crop, said Bhagirath Chaudhary, Director, South Asia Biotechnology Centre (SABC).

SABC is implementing an integrated pest management (IPM) project of the Department of Biotechnology in cumin in Rajasthan, covering thousands of farmers in the region. Chaudhary said there’s a drought-like situation in the western districts of Rajasthan, where cumin is grown. The rainfall deficit ranges from 35-50 per cent in five districts. including Jaisalmer and Barmer.

Chaudhary felt that the rising price trend augurs well for jeera as it could bring back farmers’ interest in the seed spices crop. Cumin prices touched a low of ₹12,000 per quintal this year, evoking fears that farmers would move away from the crop. “The market is factoring in the scanty and erratic rainfall,” Chaudhry said.

“Jeera requires less rain. The acreage is unlikely to get affected and a clearer picture will emerge in October,” said S N Saksena, Director (Acting) ICAR-National Research Centre on Seed Prices in Ajmer.

According to the first advance estimates, cumin seed production was pegged at 8.56 lakh tonnes during 2020-21, lower than the previous year’s 9.12 lakh tonnes. The area had declined marginally during 2020-21 to 12.41 lakh hectares (lh) compared with the previous year’s 12.76 lh. Gujarat is the largest producer of cumin, where production stood at 4.29 lakh tonnes during 2020-21, while in Rajasthan, the output of the spices seed crop was estimated at 4.25 lakh tonnes.

Published on August 25, 2021

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