April to set the trend for spices

MARKET OUTLOOK

A clear direction for the entire year will be set for turmeric, red chilli and black pepper markets in April. Farmers, traders and consumers expect a clear picture on crop condition in Vietnam and China to emerge by the second fortnight of April.

Turmeric

Turmeric prices are likely to decline at least by 20 per cent once the demand from the pickle sector subsides in a month's time. At present, the spread between spot and derivatives is about 25 per cent with spot prices trailing. According to Sharad Shah, a Sangli-based trader, the price is set to slump up to Rs 400 per quintal by April 20 with a slowdown in domestic demand. India does not have any significant presence in exports markets.

"Turmeric consumption is yet to pick up globally. So there is only minimal demand countries such as China, Bangladesh and the US," said Sharad Shah.

In the spot market, average variety of turmeric is quoted between Rs 2,400 and Rs 2,500 per quintal while Rajapuri is sold in the range of Rs 3,000-4,000 per quintal.

Chilli

Traders are divided on the future of chilli prices. A section believes that the hot variety would remain strong throughout the year due to lower yield despite higher acreage. Yogesh Mehta of Spice Exim, a noted Vashi-based trader, sees stronger Chinese demand propping up prices. Labour charges too are increasing. Hence, the price is estimated to remain firm next month between Rs 8 and Rs 10 per kg.

However, the other section of traders see a bearish trend as output is expected to be higher this year owing to an increase in acreage, thus offsetting the demand surge. However, they say a sustainable direction in the price can be expected only after April 15 as by that time the crop condition in China would become clear. At present, stemless chilli is quoted at Rs 5,300 per quintal while the good variety without stem is sold at Rs 3,800 per quintal. The commodity closed at Rs 4,346 per quintal on the NCDEX on Friday. The country is expecting a total of 2.3 crore bags of chilli this season against last year's 1.35 crore bags.

Black pepper

Black pepper price is likely to slump at least by Rs 5-7 per kg next month due owing to supply from Vietnam. Traders are, however, cautious in releasing stocks expecting the price to go up. This is resulting in a supply tightness in the domestic market.

Arrivals from Karnataka is on the lower side, which is pushing up the prices at present. The situation is expected to normalise next month when inflows from Vietnam start. Vietnam is expecting good crop this year with the output estimated at 1,00,000 tonne.

India, too, sees a fairly higher crop this year at 50,000 tonne. But, higher demand of up to 62,000 tonne is expected to wipe out the entire carry forward stocks of up to 20,000 tonne.

At present, current FOB price of $2,400 for 500 gm and $2,500 for 550 gm is approximately double the price of last year at $1,250 and $1,400 last year.