Jeera has seen a supply glut in two consecutive seasons
Damage to the standing jeera crop from unseasonal rains and hailstorms has led to a rally in the jeera market. Traders see the market remaining firm and likely to cross the previous high depending on good export demand. 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.
On Friday evening, the spot price in Unjha at the NCDEX counter showed Rs 17291.65 per quintal. On November 1, 2014, the spot price stood at Rs 11,376 per quintal. The active May contract has surged more than 20% to Rs 17,680 per quintal on NCDEX in the last two weeks.
“Unexpected rains and hailstorms in major producing belts, especially Rajasthan and Gujarat, have damaged the standing jeera crop which was ready for harvest. Heavy rains and hail have caused lodging in matured crop which may result in lower yield,” Ritesh Kumar Sahu of Angel Commodities told FE. He estimates the output to be lower by 50% from the normal and the quality of the crop to be on the lower side. In Rajasthan, yield loss may be about 40% on account of crop damage, while in Gujarat yield loss is around 10%. Quality loss is also reported from Gujarat and Rajasthan, where the seeds turned black.
Jeera has witnessed a supply glut in the past two consecutive seasons owing to record production. “This year we have seen the tables turning with sharp decline in area under cultivation. Carry forward stock for the 2014-15 season is revised down to 1.38 lakh tonne from 1.98 lakh tonne due to upward revision in total demand to 5.2 lakh tonne from 4.7 lakh tonne. Total y-o-y supply for 2014-15 is estimated to see a shortfall by 29% mainly due to expectation of 39% decline in production,” a source at Kotak Commodity Services said.
Geopolitical tensions in Syria and Turkey have led to a supply crunch in global markets, raising supply concerns from the two major exporting countries. Export orders are diverted to India. Jeera exports stand at 1, 28,500 tonne in the first nine months (April-December) of 2014-15, a rise of 28% from the same period of the previous fiscal. Angel Commodities reports supply is expected to be tight as jeera production could fall to five year lows. “We expect demand from traditional buyers from Middle East to be active during May and June before Ramzaan along with seasonal demand in the domestic market,” Angel sources said. “Jeera prices in the current year are above 3 years’ average price and seen in the uptrend. It is expected to remain firm till July end. New crop from Syria and Turkey will enter the world market during the end of July. If exports increase due to higher demand from China, the market could cross the previous high and surge ahead,” Ritesh added.