Jeera (cumin) prices in the domestic market are expected to stay volatile in the coming months on expectations of increase in export demand. But concern over the quality due to unseasonal rains at the time of harvesting in Rajasthan and Gujarat has impacted the prices this season.

In last one month, prices have been quite volatile and moved in both directions.

Spot prices surge

The spot prices of jeera have surged to ₹18,538 a quintal from ₹17,670 levels – an increase of 5 per cent and now again down 6.8 per cent to trade currently at 17,358 levels.

In the current season, spot jeera prices have surged about 18-22 per cent during April-May due to aggressive buying by traders and stockists on export demands amid reports on lower arrivals from the production areas.

The prices have touched a high of ₹17,900 in April and then move to season’s high at ₹18,500 in May.

Meanwhile, during April-May, the most active NCDEX July contract, surged by 18.9 per cent to ₹19,075 a quintal from ₹15,015 levels and then recovered about 6.3 per cent to 17,855 levels .

Earlier, the prices during February – March were steady and trading near ₹15,200 as exporters were waiting for new season’s arrivals, which were delayed due to late sowing of jeera, to place their export orders.

Spot jeera in June is trading in downtrend as export demand has been a little sluggish on arrival of lower quality jeera in Gujarat and Rajasthan.

However, the current market price is 57 per cent higher compared to prices prevailing last year during same time. Similarly, the NCDEX July contract is down more than 9 per cent in June.

Arrivals down

In this season, jeera arrivals in Gujarat mandis have been quite low compared to last year.

According to agmarknet data, the arrivals during April-May period are down 62 per cent to 49,712 tonnes from 1, 31,260 tonnes last year.

Similarly, arrivals in Rajasthan also are down 31 per cent to 17, 590 tonnes (25, 441 tonnes).

The lower arrivals are mainly attributed to lower sowing area in Gujarat and damage reported in Rajasthan due to untimely rains in March.

Acreage slips

According to the Agriculture Ministry, around 2.14 lakh hectares (lh) of jeera crop has been damaged in the Rajasthan, while 9,000 hectares were damaged in Gujarat.

In Gujarat, the total acreage of the spice is down 42 per cent to 2.64 lh compared to 4.54 lh in 2013-14.

Jeera lost ground to coriander, fennel and fenugreek seed on comparatively lesser profit realisation in jeera during the last two years.

Exports zoom

According to the Spices Board, India exported 128,500 tonnes of jeera in the first nine months of the financial year 2014-15 (April-December), which is 28 per cent higher compared to the same period last year.

According to trade sources, exports are expected to have crossed more than 1, 62,000 tonnes this financial year.

Total jeera exports from India last year stood at 121,500 tonnes. Vietnam, the US, UAE, Egypt, Nepal, Spain, Brazil and UK were the major exporting destinations. Lower prices of cumin have boosted overseas shipments to highest levels during last year.

But, despite higher prices, the export demand for cumin seed has been going up this season due to the geopolitical concerns and a crop failure in the other two major exporting countries – Syria and Turkey.

The prices of near, mid and far NCDEX futures contracts of jeera are less than the spot market.

Positive basis condition

This situation is indicating a major uptrend in the futures market, if prices converge during the expiry.

However, it may lack uptrend, if traders do not prefer delivery through exchange platform which results into less buying support in futures.

Outlook

The supplies in 2014-15 are likely to be less than the demand. Jeera prices in the current season are above three years average price and expected to remain firm on regular export demand.

However, the market has already corrected down over 9 per cent in 2 weeks due to reports on quality issues, but domestic demand and below normal monsoon forecast may keep the prices in uptrend in coming months.

The writer is Associate Director – Commodities & Currencies, Angel Commodities Broking Pvt. Ltd. Views are personal.

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