Jeera likely to see moderate recovery on export demand

Tags: Commodities

Price touched Rs 17,000 a quintal in 2012 but is down to Rs 13,000 now

Jeera likely to see moderate recovery on export demand
After a significant correction over the past one year, jeera prices are expected see moderate recovery by the end of December if export demand picks up.

Jeera price had gone up to around Rs 17,000 per quintal level in 2010 and 2012 when the weather was against the crop. But since July last year the price has been falling and it was around Rs 13,000 in June this year.

After June this year, though the fall has been arrested, bearish sentiments still continued in the jeera counter, said Ajitesh Mullick, AVP-retail research of Religare Commodities.

“The monsoons were good this time in the jeera growing areas of Gujarat and Rajasthan. The rains in September increased the moisture level in the soil before the sowing in October. Favourable reports of sowing have been reaching the market and this year’s harvest is expected to be higher than last year. This increased supply estimates have been pulling down the prices, which were ruling around Rs 12,000 levels last month,” he said.

As per the Spices Board data, jeera production stood at 394,328 tonnes in 2012-13, 461,160 tonnes in 2011-12 and 403,744 tonnes in 2010-11. If the temperature remains cool till December in Gujarat and Rajasthan, the production should go up this year above last year’s level.

Jeera, or cumin seed, is a winter crop sown from October and farmers mainly depend on rains to moisten the land for sowing.

There has been good export demand for Indian jeera after other cumin producing countries such as Turkey and Syria reported lower production this year. The political tensions and disturbances in the areas have affected the jeera production there. When their supplies to the Gulf market dwindle, there could be higher demand for Indian jeera in the international market.

“Exports can go up if the US dollar-rupee movement too is favourable for the trade. A strong dollar against Indian rupee can bring in more export revenue for jeera farmers and also support the prices,” Mullick said.

Last year, the country shipped 79,900 tonnes of jeera, up from 45,500 tonnes in the previous year. With expected rise in exports this year, the March contract at the futures market also has shown some upside swing in prices. The March contract of jeera has a support of Rs 12,500 per quintal and a resistance of Rs 13,100. If jeera breaks the immediate resistance level, further upside of Rs 13,500 is expected.

Some analysts say the demand outlook remains weak and the area under cutivation is expected to expand. Good crop prospects are likely to keep the prices under pressure for some time to come. Marketmen say subdued demand from retailers and stockists against adequate stocks, have kept jeera sluggish in the wholesale kirana market. Meanwhile, domestic price of Jeera/cumin is expected to decline going forward. SMC Comtrade in pointed out that the sowing is turning normal after weather disturbances in Gujarat and some southern states. Moreover, the higher stocks in Unjha mandi around 8– 10 lakh bags is adding to the bearish momentum.

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