Jeera to remain sluggish

Market Outlook

Poor demand for cumin seed (jeera) may lead to a further fall in prices over the next week. If the declining trend shown by the commodity in the last few months is any indication, jeera may fail to sustain at higher levels in the near term.

The offtake at the spot market in Unjha (delivery centre), which re-opened on Thursday after Diwali, has been falling. It registered a fall of 50 per cent to 6,000 bags on Friday compared with 12,000 bags on Thursday. The supply stood at 2,500 bags (each of 55 kg) on Friday. According to commodity analysts, this is an indication of the low demand scenario in the market.

"At Rs 10,500 a quintal, the contract for December delivery has a good support level. However, if this level is breached, a further fall cannot be ruled out in the market," said Faiyaz Hudani, an analyst tracking spices at Kotak Commodity.

Though the last few trading sessions showed signs of consolidation at around Rs 10,600-10,800 a quintal, marketmen said that since the spot market remained closed, the futures might not paint a true picture of the actual market conditions. According to commodity analysts, unless demand picks up, the market may not scale up and the resulting selling pressure could bring the prices of jeera down to as low as Rs 10,000 a quintal.

However, traders hold a different view for the medium term. According to a Mumbai-based trader, Bhaskar Shah, prices of jeera should go up as demand, especially from the overseas market, rises.

"Till June 2008, the country is the only jeera supplier to the entire world. I am bullish on jeera market," he said. According to him, there is demand from the US, South America, West Asia, South Africa and far eastern countries.

Market sources said that at present, the domestic rates of jeera was competitive at $3000 a tonne compared with the global rates of $3200-$3600 a tonne.

The country, on an average, exports around 22,000-25,000 tonnes of jeera every year. Meanwhile, the initial market estimates on the sowing front suggest that there is a fall of 25 per cent in jeera acreage in the Saurashtra region (a major producer). Last season, the country had a total production of just 55,000 tonnes, a drastic fall of over 35 per cent, compared with the earlier production figure of 85,000 tonnes.

Sowing in Gujarat is expected to be over by the first week of December. In Rajasthan, the other major jeera producing state, sowing will continue till the end of this year.

Dilip Patel, a Unjha-based trader, said, "With the expected decline in acreage, production could be lower." Reports suggest that farmers are less interested in going for jeera cultivation and have cited several risk factors. Sources added that onion and garlic were being given priorities by farmers. The next few days will also indicate if farmers take to wheat. This could further squeeze the jeera share.

Last season, excessive floods in the western part of Rajasthan (comprising Barmer and Jaisalmer) and Gujarat resulted in a significant decline in production.

The fluctuation in prices may also force farmers away from jeera. The markets had overheated on the back of a decline in production output, reaching a high of Rs 14,000 a quintal only to fall back to as low as Rs 10,000 a quintal.

The new crop is expected to start hitting the mandis by the first week of February, especially from Gujarat.

On the National Commodity and Derivatives Exchange (NCDEX), the December futures of jeera closed on Friday at Rs 10,571 a quintal, down 0.71 per cent or Rs 76. From the beginning of this month, the last fortnight has seen a fall of Rs 921 or 8 per cent from Rs 11,492 a quintal. The spot prices ruled at Rs 110-112 a kg in Unjha on Friday.