After falling to 10-month low in February, Jeera futures are recovering mainly on expectation of improving export demand for new season crop and concern over lower-than-expected production estimates from Gujarat - the leading Jeera producing state.
Harvesting of Jeera will proceed throughout March and April.
The most-traded April delivery contract on National Commodities and Derivative Exchange (NCDEX) jumped about Rs 360, or 2.4%, during the current week to trade at Rs 15,680 per 10 kg. The same contract slipped below Rs 15,000-level in the last week of February.
Jeera prices on NCDEX are seen recovering after they bottomed out in February.
As per exports data from last 5 years, exports of Jeera from the country are highest during March, April and May. Average monthly exports are about 11,900 tonnes, calculating after averaging 5-year monthly data, but for these three months, it is more than 18,100 tonnes.
According to the second advance estimates, production of Jeera in Gujarat in 2018/19 is expected to be lower by about 25 percent (2.23 lakh tonnes (lt)) compared to last year’s forecast of 2.97 lt amid lower acreage in the state due to dry conditions during the sowing season and expected lower yield.
However, trade sources believe that the Jeera crops have benefited from good climatic conditions during the growth and reproductive stages and irrigation facilities provided by the government through canal water.
Federation of Indian Spice Stakeholders (FISS) and Agriculture Produce Market Committee, Unjha, estimated output in Gujarat may be down by only 3% to 1.67 lt and expect an increase of 20% in Rajasthan to 2.50 lt.
As per Federation estimate, Jeera output in the country will be 4.16 lt in 2019, up by 9 percent on-year supported by sharp jump in production in Rajasthan.
After domestic production outlook, the main price driver for Jeera for the next two quarters will be the export demand from the country.
As per the government data, Jeera exports during the first 9 months of 2018/19 are pegged at 1.37 lakh tonnes, up 25% compared to 1.10 lakh tonnes last year for the same period. The major export destinations for cumin from India are Vietnam, Bangladesh and USA. Cumin exported in both seed and powdered form.
Cumin exports were higher due to much improved export volume during the start of the financial year 2018/19. About 75,826 tonnes of cumin (>55% of cumin by volume) exported in the first quarter while in second and third quarter the volume declined to 34,200 tonnes and 26,900 tonnes respectively.
Exports have surged because domestic prices slipped to two-year low of Rs 14,000 per quintal during March last year.
Cumin futures are currently heading for second consecutive weekly rise this week as traders and stockists are actively buying new season crop on anticipation improving export demand as seen last year during same period.
Export demand gradually increased during the last quarter of FY18/19, as Jeera futures fell about 25-30% since the high in November to about 15,000 levels. Earlier during August to December period, exports declined as domestic prices were hovering between 19,000 – 20,000 rupees.
Since the prices are lower and with expectation of good export demand, Jeera prices may trade higher towards 16,500 levels in next couple of months (CMP: 15,665 per 100 kg) but before we expect that the new season arrivals may pressurize price a little.