Weak trend in spices may continue
MARKET OUTLOOK
| Fundamentals in chilli and turmeric suggest long-term weak phase, while cuminseed (jeera) and pepper look good in the long term but indicate a bearish trend in the very near term. However, marketmen said that for the week ahead, spices would be on the weaker side. |
| Last week, spices futures ended in red. Chilli July futures closed at Rs 4,640 compared with its previous week's close of Rs 4,828 a quintal, down 4 per cent. Similarly, futures of jeera and pepper declined by 4.7 and 4.5 per cent, respectively, to Rs 12,983 and Rs 13,702 a quintal, during the same period. |
| According to commodity analysts, lesser market activities with no buyers and sellers will push spices into a range-bound mode along with a bearish tone. They said that traders in jeera and pepper had suffered losses due to additional margins of 5 per cent on the two commodities (taking it to a total of 25 per cent in April) and positions were being squared off in order to compensate the losses incurred. |
| Meanwhile, the commodity markets regulator, Forward Markets Commission' (FMC), ruling that it will rather wait and watch the spices market before going for any reduction in the margins saying that increased margins are producing desirable results, further rule out the chances of any quick relief to traders who have been demanding for reducing margins on jeera and pepper. |
| Jeera futures can oscillate between Rs 12,750 and Rs 13,250 a quintal, where as pepper is expected to be fluctuating in the Rs 13,300-13,700 range. Market sources ruled out pepper touching levels of Rs 14,000 a quintal this week as happened in the previous week. |
| Bhaskar Shah, a Mumbai-based jeera trader, said, "Futures behaved just opposite to the fundamentals. Local demand will firm up once it rains. Till then (this week), I see physical market rates to remain a little weak." |
| Jeera output is expected at 55,000 tonnes this year compared with last year's 85,000 tonnes. |
| Syria, another key jeera producing country apart from India, is reported to have a crop damage of 30-35 per cent due to adverse weather situation. Earlier estimates from the country were of 50,000 tonnes output, which has now been pared to 32,000-35,000 tonnes. Estimates from Iran and Turkey are 10,000-14,000 and 8,000-10,000 tonnes, respectively. Analysts said that due to global shortage of jeera, pressure might build up on domestic market pushing the prices up later. |
| The market for turmeric, like chilli, is reeling under a glut with estimates of over 50 lakh tonnes output compared with last year's 46 lakh tonne, may not see any respite. "There is still a chance of downward movement of Rs 25-50 a quintal in turmeric," said Sangli-based trader Milan Shah. He added that coming season would certainly see a decrease in acreage as farmers could not fetch attractive prices this time. |
| Chilli with over 75 lakh bags (each of 35 kg) in storage houses is inching slowly to lower levels. Last week, after the opening in the Guntur spot market, rates ranged between Rs 4,300 and Rs 4,600 a quintal. Sources said it might drop down to below Rs 4,000 a quintal in a few months from now. Estimates for 2006-07 is 230 lakh bags compared with 135 lakh bags last year. |