Jeera likely to trade higher despite good output, high stocks
By Invitation: Ritesh Kumar Sahu, Fundamental analyst – agri commodities Angel Commodities Broking

Jeera (cumin) futures have recovered more than 17 per cent since its low in March this year amid good demand from stockists and traders for the new season crop. In March, prices dropped to two-year low on reports of bumper production, which will results in higher supplies during the coming arrival season. Currently, the monthly trend is looking positive but there are chances of corrections from the higher levels.

We have seen corrections from the higher levels in April as well as May due to jump in supplies in case of improved prices. On the NCDEX, the most liquid June delivery contract slipped to 5 weeks low this week to Rs 15,510 per qu­i­ntal in 4 trading sessions but recovered by Rs 470 to trade at Rs 15,980 in its next 3 se­s­s­i­ons due to some bargain buying and improved purchases by exporters and stockists.

Jeera arrivals in current month doubled against last ye­ar’s, according to the data compiled by Agmarknet. In the first 20 days of May, je­e­ra arrivals are pegged at 15,275 tonnes against 7,658 tonnes last year for same period. The rise in arrivals is attr­i­b­uted to improvement in prices.

During the current quarter (April-June), jeera futures increased by 11 per cent or Rs 1,590 per quintal due to good export demand for the new season jeera after prices sl­u­mp to 2-year low (of Rs 14,030 per 100 kg) in March.

At present, jeera prices are trading lower against last 2 years due to higher producti­on estimate. According to the third advance estimate for Gujarat, this year production estimated at 292,000 tonnes, up by 47.5 per cent primarily on higher acreage and favo­urable climate. Jeera production for the previous year was put at 198,000 tonnes.

Despite record domestic prices, jeera exports have not slowed in 2017-18 season. As per the commerce department, in FY17-18, the country exported about 127,000 tonnes of cumin (jeera) during April-February, up by 13.2 per cent against last year’s exports of 112,000 tonnes.

India was to export 15,000 tonnes of jeera in March, wh­ich would take yearly exports volumes to 142,000 tonnes, up 10.7 per cent over 128,000 tonnes during 2016-17.

 

Cumin exports were up by 30 per cent on year in February to 9,512 tonnes ag­ainst 7,325 to­nnes last year. Exports were higher MoM by 23.5 per cent. According to market sources, exports of jeera are likely to have risen to 132,000 tonnes in 2017-18 (April-March), up 11 per cent on-year, because of the fall in domestic prices. The export volumes are considered to be encouraging due to the fact that the prices have been on lower side for the new season crop due to record production.

In 2017-18, jeera worth Rs 2,144.6 crore was exported in seed and crushed form at an average price of Rs 16,700 per 100 kg for the seeds and Rs 19, 934 per quintal for the crushed (powdered) form. The major jeera (seed) exp­ort destinations are Vietn­am, Bangladesh, the UAE and the USA, which account for abo­ut 55 per cent of all cumin exported from India. In powdered form cumin is mainly exported to the USA, the UK, South Africa and Au­stralia. The number of countries importing Indian cumin has grown ov­er the year. In 2014-15, 119 countries were buyi­ng cumin from In­dia and this went up to 139 in 2017-18.

Jeera prices are expected trade higher in long term despite good production and higher stocks available amid hig­her export demand. We may see some corrections if exports demand shifted to co­untries like Syria and Turkey as harvest starts next month.

We expect jeera to correct further in short to medium term on the availability of hi­gher stocks and slowdown of exports during the next two months. However, there are expectations that exports may keep pace as prices are low this season compared with last year. Any news on lower than expected jeera production in Syria and Turkey will take prices to well over Rs 17,200 in the next two months.