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June 18, 2007 12:21 IST
Spices Futures market is heading south and the trend is expected to continue for sometime from now.
Chilli and turmeric are likely to see a long-term weak phase, while jeera and pepper showed bearish trend in the near term. Over all, according to market analysts, spices look weak for the coming few days.
In the second week of June, spices Futures witnessed a downfall. Chilli July Futures closed at Rs 4,640 compared to its previous week's close of Rs 4,828 a quintal. During the same period, Futures of jeera and pepper declined by 4.7 and 4.5 per cent, respectively, to Rs 12,983 and Rs 13,702 a quintal.
The reasons for the slide are many. Lesser market activities with no buyers and sellers are one of them. Traders in jeera and pepper had suffered losses due to additional margins of 5 per cent on the two commodities (taking it to a total of 25 per cent in April) and positions were being squared off in order to compensate the losses incurred.
Commodity markets regulator Forward Markets Commission's ruling that it will rather wait and watch the spices market before going for any reduction in the margins saying that increased margins are producing desirable results, further ruled out the chances of any quick relief to traders.
According to analysts, jeera Futures can oscillate between Rs 12,750 and Rs 13,250 a quintal, where as pepper is expected to be fluctuating in the Rs 13,300-13,700 range.
Jeera output is expected at 55,000 tonnes this year compared to last year's 85,000 tonnes.
Syria, another key jeera producing country apart from India, is reported to have a crop damage of 30-35 per cent due to adverse weather situation. Earlier, estimates from the country were of 50,000 tonnes output, which has now been pared to 32,000-35,000 tonnes. Estimates from Iran and Turkey are 10,000-14,000 and 8,000-10,000 tonnes, respectively. Due to global shortage of jeera, pressure might build up on domestic market pushing the prices up later.
The market for turmeric, like chilli, is reeling under a glut with estimates of over 50 lakh tonnes output compared with last year's 46 lakh tonne. There is still a chance of downward movement of Rs 25-50 a quintal in turmeric.
Chilli with over 75 lakh bags (each of 35 kg) in storage houses is inching slowly to lower levels. Last week, after the opening in the Guntur spot market, rates ranged between Rs 4,300 and Rs 4,600 a quintal. Sources said it might drop down to below Rs 4,000 a quintal in a few months from now. Estimates for 2006-07 is 230 lakh bags compared with 135 lakh bags last year.
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