Supply glut weakens cardamom

During the week ended December 2, 2016, cardamom futures lost most of its past two weeks’ gains of 9.3 per cent as traders liquidated their long positions. Cardamom futures touched a multi-week high of ₹1,430 per kg. This led to planters increasing supply of cardamom across auction centres, resulting in supply glut in the physical market. However, demand was subdued at a higher price level, which resulted in a fall in prices. Further, forecasts of good rainfall over Kerala and Tamil Nadu due to cyclone also weighed on the cardamom futures market. Hence, the December futures settled the week at ₹1,281.50 per kg, lower by 7.4 per cent while the January futures contract closed the week with a loss of 3.91 per cent at ₹1,365 per kg. Staggered delivery period for December expiry would commence from December 5.

Hence traders rolled over their open positions from December contract to next month contracts i.e., January and February contracts. Arrivals till December 2 were at 333 tonnes while average prices oscillated between ₹1,226 per kg and ₹1,351 per kg with superior quality material fetching ₹1,578 per kg.

For the week ahead, MCX traded cardamom futures is expected to continue to remain weak on emerging negative factors. Extended profit booking at current levels may weigh on the cardamom futures market. Expectations of possible slowdown in trading activities at spot markets due to higher prices may also impact market sentiment negatively. Forecast of good rainfall till December 6 in Kerala may also add pressure to futures prices as rainfall at this stage is good for crop production during the next season. Hence, we expect cardamom futures to remain weak during the week.

The writer is Head-Commodity Research, Karvy Comtrade

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