Spices on a price spiral, as demand runs ahead of availability.
After cereals, vegetables and fruit, spices are turning hot. They may not draw the government’s attention due to negligible presence in the wholesale price index but prices of most spices are spiralling.
The rise, over the past five months, is led by turmeric and cardamom. While others like cumin seed and coriander are gradually recovering their losses, experts say they will also become costlier in the weeks to come.
| A STEEP CLIMB NCDEX FUTURE PRICES OF NEAR MONTH CONTRACT | |||
| Jan 1, ’10 | May 19, ’10 | % chg | |
| Turmeric-Nizamabad | 7398 | 14851 | 100.74 |
| Cardamom* | 1138.6 | 1572.5 | 38.11 |
| Pepper | 14230 | 16277 | 14.39 |
| Chilli LCA 334-Gunt | 5415 | 4440 | -18.01 |
| Cumin seed - Unjha | 14557 | 11836 | -18.69 |
| Coriander - Kota | 4023 | 2762 | -31.34 |
| * MCX Future price (Rs/kg) | |||
The price of turmeric has doubled in the past five months due to lower crop estimates for this year. The output this season was estimated at 4.2-4.3 million bags (a bag is 80 kg) against 4.9-5 million bags in the previous season. India’s annual consumption is estimated at 4.5-4.6 million bags. Late reports of crop damage in Andhra Pradesh, a major producer, has also led traders to hold stocks to gain from high prices in the future.
In the spot market, the rise this year has been 60 per cent at Sangli. The price was Rs 160 a kg on Thursday as compared to Rs 100 a kg on January 1. In Nizamabad, a key spot market in Andhra Pradesh, the commodity has surged over 300 per cent since May 2008.
Attributing the price rise to shortages, Sharad Shah, director of Sangli-based Shri Halad Vyapari Association, said the price would reach Rs 200 a kg by the end of the current season. Turmeric is sown between June and August for harvesting between December and March. Analysts say a normal monsoon may increase area under turmeric by at least 35-40 per cent.
“When prices were high, at Rs 150 per kg, in the spot market early last year, futures prices were low. Therefore, either spot prices fell or futures surged. Futures were at their lows from April-May till early this year in anticipation of high arrivals due to harvesting around these months. But, as time passed, arrivals dwindled due to crop losses and prices started shooting up,” said Shah.
More than the lower crop estimate, cardamom prices doubled last year due to higher quotes from markets abroad. “Overseas buyers bought the commodity at the price we quoted. This means buyers were reluctant to ensure availability at more than the price negotiated, which ensured that prices kept firming up through the season,” said Moolraj Ruparel, one of the largest exporters of the product.
Average quality cardamom was today quoted at Rs 1,300 a kg as compared to Rs 650-700 per kg a year earlier. In 2009-10, the output was estimated at 11,500-12,000 tonnes as against 13,000 tonnes in the previous year. According to an estimate, India’s total exports this year rose sharply to 2,000 tonnes from 1,500 tonnes a year ago. India’s annual consumption is between 11,000 and 12,000 tonnes, partly met by imports from Guatemala, the world’s largest producer.
Machine-cleaned coriander was today selling at Rs 30 a kg, a decline of about 20 per cent so far this year. But, the commodity is set for a turnaround to at least Rs 35 a kg by Diwali due to low availability. Ramsuraj Agrawal, partner with Ramsuraj Jugalkishore, a Kota (Rajasthan)-based trader, said stockists has low residual stocks. Although he could not estimate the crop size, he said output was low this year.
Pravin Patel, a leading cumin seed trader in Unjha, Gujarat, subscribed to the views of other market players who said the commodity had the potential to rise to Rs 150 a kg by the end of this year from the current level of Rs 120 a kg. So far this year, the commodity has fallen hardly Rs 3-4 a kg in the spot market.
According to Sudha Acharya, a spices analyst with Mumbai-based trading firm Kotak Commodity Services, chilli may surge in the coming months. Higher rabi yield compensated last year’s kharif loss, to balance the output at 1.27 million tonnes, around the same level as last year.
The supply of black pepper had dried up despite favourable demand from domestic and overseas markets. Therefore, the price trend was looking firm, said Acharya. Black pepper output was estimated at 71,000 tonnes this year as against 60,000 tonnes a year ago.
