After declining from a high of Rs15,870/ quintal to Rs13,800 level due to coronavirus outbreak and rising supply levels, jeera (cumin) prices started picking up thanks to the export demand renewal. On Monday (September 7), Jeera futures contract (Sept 18 expiry) was trading at Rs13,900/quintal on NCDEX. Jeera futures contract (Oct 20 expiry) was trading at Rs14,065 per quintal.
Jeera futures (October) contract is expected to descend and test Rs13,900-13,850, facing resistance near Rs14,160, observes Subhranil Dey, senior research associate (agro) at SMC Global Securities.
The spot prices have started to weaken because Gujarat and Rajasthan, the main jeera growing states in India, received heavy rainfall, which is expected to boost production and supply of the commodity as farmers expand the area under cultivation. Jeera being a Rabi crop requires good soil moisture for better yield.
“Due to good monsoon season, there’s an expectation that the sowing area may increase this season. This will increase the supply levels in the domestic market. It would be advised to sell Jeera futures (October) on rise, as it is facing resistance around it recent previous high of Rs14,490 and 14,580. In days to come, we are expecting a correction and it would deepen towards Rs13,000, if it breaks the previous month low of Rs13,830,” forecasts Dey.
In the first quarter of the year, jeera futures crashed from high of Rs15,850 to Rs12,750 a quintal, because of the corona virus outbreak in China, which is considered as the largest buyer of the spice commodity from India. Secondly, the supplies were also quite high during March/April, due to the newly harvested arrivals. Thereafter, hovering sideways it stabilized and witnessed a steady recovery till Rs14,580, according to a latest report from SMC Global Securities.
“The major factor that pushed the prices up was competitive Indian parity in the international market, export deals getting materialized. India has fulfilled the increasing international demand for its quality spices in the face of tough competition in global markets. In view of the global pandemic situation, the demand for quality Indian spices is on the rise for their immunity-boosting properties. In 2019-20, cumin was the second-most exported spice, recording an increase of 16 per cent in volume and 12 per cent in value,” remarked Dey.
Going ahead, analysts forecast some weakness in jeera as the Rabi crop requires good soil moisture for better yield. Jeera grows well in both tropical and sub-tropical climate and it comes up well in all types of soils, but well drained sandy loam soils are best suited. It thrives well between 9o to 26o C and annual rainfall of 30 to 270 cms. Crop duration is 110-120 days depending on the variety. In India it is mainly sown in October to November and harvested in February and March.
Monsoon- The Catalyst
Overall, entire India in August received the highest rainfall since 1973 when the tally was a shade higher at 27 per cent. The surplus rains have not only compensated a deficit-July, but it has gone beyond to take the season to a possible excess. The exclusive feature of the month includes a recording of above-average rainfall on a daily basis for 25 days. This includes an excess of 50 per cent rain on 10 days with the highest score of 97 per cent on August 21, according to the data put out by Skymet Weather.
On the demand side, the producers will be definitely eyeing the export demand in the international market, as Indian jeera is much in demand as compared to Syria and Turkey owing to the good quality. Along with China, UAE and Vietnam are also preferring Indian Jeera.
Moreover, export buying from the European Union (EU) for Indian cumin seed is also expected to pick up, as the production in Syria has been reported to be lower, for the past few years.
This year monsoon has brought so much of rain to Rajasthan, Gujarat, and parts of North-West and adjoining Central India that flooding conditions were reported from many areas. Hence, there is an expectation that the sowing area may increase this season. But, this year cumin will also face a tough competition against mustard and chana, as both of these commodities have shown a stellar performance.
The estimated production for the season 2019-20 (Oct-Sep), was 5,35,500 tonnes as against 4,16,600 tonnes in 2018-19. The total area under jeera had increased by about 25 per cent at 10,25,600 hectares. Of the two jeera producing states, Gujarat witnessed 40 per cent jump in the acreage to 4,39,830 hectares as against 3,15,000 hectares 2018-19 (Oct-Sep). While Rajasthan reported a modest 16 per cent increase in the cumin seed area at 5,85,770 hectares as against 5,06,000 2018-19 (Oct-Sep). The overall yield was estimated to be in the range of 522 kg per hectares for the season 2019-20 (Oct-Sep).
“In the present scenario, the forward curve is showing a minor uptrend as the supplies are less available on the spot markets due to Covid-19 and flood situation in the major producing states, whereas the demand is sustaining at the current price level. But going ahead, we may see a bearish trend evolving as soon as the sowing will begin next month. The export demand will also probably slow down as the moisture content will rise,” adds Dey.
The writer is a business journalist with 27 years of experience