Jeera, turmeric to become spicier on short supply

Among agri-commodities, cumin seed (jeera) and turmeric prices surged sharply last month. In the spot market, they began the year with monthly gains of over 20 per cent and 25 per cent, respectively.

In the derivatives market (NCDEX), jeera pricesrose 28 per cent to ₹15,650/quintal and turmeric prices increased to ₹8,990, up 42 per cent in December.

In the first half of 2014, prices of these spices witnessed a downtrend due to higher carryover stocks and arrivals, following two consecutive years of record production.

But prices moved up in the second half on good and persistent export demand, reports of crop damage and lower acreage in the country.

Jeera prices increased by 32 per cent since September on better export demand and tight supply in the spot market.

During the same period, turmeric prices also surged by about 40 per cent on account of high export demand and lower than expected acreage.

According to the data, jeera, a rabi crop, has been sown on 2.64 lakh hectares (lh) this year in Gujarat compared with 4.54 lh during the same period a year ago. In Rajasthan, it has been sown on 3.39 lh this year against 3.90 lh last year.

According to trade sources, sowing of jeera in Gujarat and Rajasthan has been affected due to erratic monsoon and farmers fetching low prices in the last two years.

Jeera is sown from October till the beginning of December and harvesting starts in February. March-April will be the months of peak arrivals.

Meanwhile, late withdrawal of South-West monsoon this season resulted in increased soil moisture, which is not beneficial to cumin seeds.

Jeera is also sensitive to variations in sowing period and expected rains during the harvesting period (February to March) might affect the quality. Farmers in Gujarat have moved to more remunerative crops such as coriander, fennel and potato.

Tamil Nadu and Karnataka recorded lower acreage in turmeric last year, down 6-10 per cent year-on-year due to delayed monsoon and poor price realisation last year.

Meanwhile, acreage in Andhra Pradesh (including Telangana), has gone up by 8-10 per cent, compared with last year, along with concerns over crop loss due to cyclone Hudhud that hit the State in October.

The extended monsoon has further reduced the prospect of good production in Maharashtra, Andhra Pradesh and Karnataka. Thus, the production is likely to be down by about 15-18 per cent compared with last year.

Latest data from the Spices Board point out that exports of jeera and turmeric have been encouraging. During April-September of the current fiscal, 87,500 tonnes of jeera were exported, up 24 per cent against 70,243 tonnes in the same period a year ago. The surge in export demand has been largely due to restricted supply from Syria and Turkey due to geopolitical tensions in the region.

Turmeric exports increased by 10 per cent during the period to 43,000 tonnes due to increase in medicinal, textile and cosmetic usage.

Jeera and turmeric prices are likely to firm up in the coming months on short supply and robust demand.

Further, lower carryover stocks and concerns over production estimates will also lead to spice up the prices of both the commodities.

Currently, jeera February contract on the NCDEX (CMP: ₹15,590/quintal) is down about one per cent week-on-week.

The selling pressure has been attributed to conductive weather and recent good rains in parts of Rajasthan and Gujarat. But, expect jeera prices to pick steam later this year and may touch ₹18,000 levels.

Turmeric April futures on the NCDEX (CMP: ₹8,980) traded lower by one per cent week-on-week mainly due to profit-booking by traders at higher levels. Expect prices to touch ₹11,000 on the strong fundamental factors.

The writer is Associate Director – Commodities & Currencies, Angel Broking Pvt. Ltd. Views are personal.