Speculators heat up cumin seed market

Bad weather conditions in Syria and Turkey, coupled with the entry of speculators and stockists, have led to a surge in the domestic cumin seed (jeera) market. The rise in prices has continued despite any significant demand from the export and the domestic markets.

The last fortnight witnessed a rise of 6.64 per cent in the May contract to Rs 13,865 a quintal from Rs 13,002 a quintal on the National Commodity and Derivatives Exchange (NCDEX). The spot prices climbed by 4.78 per cent to Rs 13,025 from Rs 12,431 a quintal during the same period.

"Speculators have entered the market. On the fundamentals, the trend was expected to be bullish on the back of less output this season. However, the market was not expecting a rise at such levels," said Bhaskar Shah, a Mumbai-based trader.

Commodity analysts earlier said that the market would see some correction, as demand could not garner strength at such high prices. Contrary to it, the prices (both futures and spot) jumped further. Faiyaz Hudani, an analyst at Kotak Commodities, said, "The market is overvalued at these levels. We would have to wait and watch the jeera market." He added, though, that the current week should see some correction.

The country is facing a shortage of over 30,000 tonne against the last year's output of more than 85,000 tonne, a drop of over 35 per cent, owing to poor acreage in Rajasthan and Gujarat, which further got damaged by rains. "There is no respite in the short term in jeera prices. There could be some, but in the next month," said Yogesh Mehta, vice-chairman of Indian Spices and Food Stuffs Association.

Reports suggest that rains in Syria and Turkey, the key jeera producers in the world, have hit the sowing of jeera crop and there are fears of a lower output. The crop is expected to hit the market between June and July.

According to unconfirmed reports, Syria could face a damage of 40 per cent in its expected output.

In Unjha, a major delivery jeera centre in the country, the arrival rate on Monday was around 13,000-14,000 bags (each of 55 kg). Though the arrival improved compared with the last week's 6,000-8,000 bags, market sources said that it had not yet reached the normal arrival rate of 20,000-22,000 bags a day. According to Rakesh Jain, an Unjha-based trader, the current week will see an arrival rate of above 10,000 bags.

However, what about the quality? Sources in Unjha said only 30 per cent of the total arrivals could satisfy the quality norms of commodity exchanges, while more than 40 per cent are of low quality.

In the spot market, the low quality jeera was quoted in the range of Rs 9,000-11,000 a quintal, while the medium quality sold in the range of Rs 11,500-12,000 a quintal. The best quality, though lesser in size, was available in the range of Rs 12,500-13,500 a quintal.

On Monday, the near-month jeera contract on NCDEX closed at Rs 13,490 a quintal, up Rs 30 against the last week's close. The contract for May delivery saw a marginal fall of Rs 22 a quintal to Rs 13,865 a quintal.