Cumin seed futures decline 12% in 2 weeks

Cumin seed futures prices have fallen by about 12 per cent on the National Commodity and Derivatives Exchange (Ncdex) in the last two weeks.

Analysts blamed slack domestic and export demand, inferior quality stocks, and expectation of crop arrivals from Syria and Turkey, two important producers of the commodity for the fall.

On April 23, cumin seed for May delivery had touched its peak of Rs 13,798 per 100 kg, while June was at Rs 14,474 per 100 kg. At 11:50am today, May cumin seed was at Rs 12,055 per 100 kg, down 12 per cent from its April 23 rate, while, June cumin seed quoted Rs 12,630 per 100 kg.

Fears that Ncdex may further tighten quality norms for cumin seed contracts since June were also dampening sentiment and forcing traders to offload positions, said Vinayak, analyst, Karvy Comtrade.

Cumin seed prices have had a considerably long bull-run on the back of a severe shortfall in domestic crop, global supply tightness, and strong demand. The May contract, which started trading on March 10, had touched a high of Rs 14,770 per 100 kg on April 12 helped by bullish factors.

"Overall the fundamentals for cumin seed are strong but temporarily the commodity price is expected to come under pressure as prices have risen considerably," said Kunal Shah, analyst, Motilal Oswal Commodities.

Also, the market is awaiting new crop from Syria and Turkey. India is the world's leading producer of the commodity followed by Syria, Turkey and Iran.

"Because of unseasonal rains, the quality of the new jeera is not very good," Shah said. An Unjha-based trader affirmed this fact.

"Not even 30 per cent of the new crop arriving is in a good condition to be accepted by Ncdex warehouses," said Bhanu Bhai.

Besides, the market is also faced with a money crisis, a phenomenon that usually follows the closing of the financial year, according to Vinayak. He expects prices to further move down a bit before bouncing back.

Cumin seed for June delivery may find strong support at Rs 12,620 per 100 kg. "If it breaks this level, then prices could go down to the next support level of Rs 12,000 or alternatively may bounce back," he said.

According to Ncdex officials, there is no truth in market talk that the exchange may further tighten quality norms. "As of now there is no plan to alter the norms," an exchange official said.

According to him, fears that the exchange warehouses are rejecting most stocks are also not entirely true. "This time around, some of the new crop is low in quality, discoloured and damaged," he said.

Ncdex had changed quality norms for cumin seed for contracts expiring November and beyond.

These norms had fixed a maximum cumin seed count of 300 seeds per one gram from 350 seeds earlier.