Exports are expected to gain momentum, say experts
Jeera prices are estimated to rally due to supply concerns and higher export demand, traders said. Reports of crop damage in China are likely to support the market in the coming days.
Though arrivals of fresh crop from the markets of Syria and Turkey may cap a rally, concerns remain about regular supply due to tension in the region.
India is the world’s largest producer and consumer of jeera. While India consumes 75-80% of the commodity produced, the other producing countries export most of the product.
Spot prices of jeera on Tuesday evening at the NCDEX counter recorded R16,265.6 per quintal.
Kotak Commodities is bullish about the commodity and reports that domestic demand is expected to gather pace in the coming days. “Exports are also expected to pick up momentum after remaining passive during the peak demand period. Peak arrival period has come to end and supply is expected to be tight owing to sharp decline in production,” Kotak sources said.
According to the latest report of Kotak, jeera supply is seen lower in India with production for the 2014-15 season revised to 3.1 lakh tonne, which is 42% lower when compared year-on-year.
“Total supply in the market, which includes opening stock, production and imports for the season 2014-15 is estimated at 4.2 lakh tonne year-on-year down by 35%. Stock to usage ratio for 2014-15 is estimated at 9%, lowest in last seven years. Demand for jeera has witnessed a compounded average growth of 7% since last five years. Significant growth in demand is mainly due to strong export demand since last three years,” sources added.
Angel Commodities reports that lower production in India and reports of crop damage from China is likely to support the market. Arrivals from Syria and Turkey may cap a rally, Angel report adds. The new crop in Syria and Turkey comes to the market from August.
Indian jeera exports are higher for the past few years due to geopolitical tensions in Syria and Turkey. Higher exports have helped jeera stay firm in the domestic market despite more production. According to Spices Board data, jeera export during the last fiscal stood at 155,500 tonne valued at R1,838.20 crore as against at 121,500 tonne valued at R1,600 crore in FY14.
However, Vishida Vijayakumar, research analyst with Geofin Comtrade, does not concur with majority and feels that the market is weak. “Demand is on the sluggish side due to lower quality of the commodity currently in the market. Trade reports suggest that the next crop (2015-16) is likely to be higher with jeera prices on the higher side and rains in the region good,” she added.