Jeera prices to hit two-month high on firm global demand, lower output

April, May contracts post sizeable gains as rains destroy crops, lower Gujarat acreage pares output

Cumin seed (jeera) prices bounced back from recent lows to their highest in two months on a lower output forecast and strong demand from overseas buyers.

The most active jeera contract for delivery in April on the National Commodity and Derivatives Exchange (NCDEX) rose 3.17 per cent to trade at Rs 18,410 a quintal before profit booking pulled it down marginally to Rs 18,310 in early evening trade on Tuesday. 

The contract showed a gain of around 8.5 per cent since early February.

Similarly, jeera for delivery in May gained 2.72 per cent on Tuesday at Rs 18,515 a quintal. Analysts expect the trend to continue on robust overseas orders. “A further upsurge of Rs 400-700 a quintal is possible on overseas demand. Exporters are likely to fetch better realisation due to the quality of the jeera crop. With estimates of lower production, jeera prices are likely to remain bullish,” said Ritesh Kumar Sahu, an analyst with Angel Broking.

A recent assessment by the Federation of Indian Spices Stakeholders in Udaipur, Rajasthan, has forecast India’s cumin seed production at 5.83 million bags of 40 kg each (233,280 tonnes) this year against 4.20 million bags of 40 kg each (168,320 tonnes) last year. The latest spell of rainfall last week is estimated to have spoiled 30 per cent of the standing crop.

Production estimates for 2016-17 are lower due to a decline in the jeera acreage in Gujarat. 

The Centre pegs production of jeera in the state at 221,000 tonnes, down 11 per cent from last year’s output of 238,000 tonnes. The output is far lower than the normal of 346,000 tonnes in Gujarat in 2013-14. Acreage has fallen to 279,000 hectares this year from 286,000 hectares earlier.

“Profit booking at higher levels limited the uptrend for jeera even as overall sentiments remained firm. Reports of exports picking up amid falling arrivals and crop damage in the recent rain in Rajasthan kept supporting prices,” said Ajitesh Mullick, an analyst with Religare Research. 

According to Agmarknet data, 33,110 tonnes of jeera arrived in the markets between March 1 and March 20, against 34,107 tonnes during the same period last year. India exports an average of 15,000 tonnes of jeera during March, April and May.

Industry players are expecting exports will cross 120,000 tonnes this year against 94,352 tonnes a year ago. Jeera exports increased 36.7 per cent to 93,724 tonnes during April- December 2016-17.