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Spices-August Wrap up

posted Aug 29, 2010, 12:59 AM by Unknown user   [ updated Oct 3, 2010, 1:17 AM ]

Higher Production of Turmeric in 2010-11, eroding the gains of the previous year. Turmeric which shined in most part of the previous year has started its journey southwards due to better crop estimates in 2010-11. Turmeric production has been pegged by around 43 percent and is projected at 69 lakh bags after two consecutive falls in the output in the previous years. Production in 2009-10 and 2008-09 was reported at 48 lakh bags and 42 lakh bags respectively. Better monsoon rains in the turmeric belt particularly A.P and Tamil Nadu led farmers to go for enhanced sowing in this spice commodity. Other reason attributed or the major reason behind sowing this spice on improved scale by the domestic farmers was handsome profits earned by them in previous year. Rainfall in this season in Andhra Pradesh has been better than the average after witnessing inadequate rainfall in the past two years. According to Indian Meteorological Department (IMD) during the period 01.06.2010 to 11.08.2010 the average rainfall registered in the State has been 446.4 mm against the normal of 339 mm, an ‘excess' of 31per cent. Also the export demand is very sluggish these days and so is the local demand. Only the festive season demand in 1 or 2 months time can give the bulls some support. Also the fact that there are lower stocks of Turmeric (16 lakh bags) in the domestic market till the fresh arrivals expected in the month of January next year, may also lend support to the prices. As we had seen last year, even a slight demand cause the price to jump a lot which is an important factor to be kept in mind. But a better sowing area, better rainfall, and over all better production levels will pressurize the prices in the long term (October onwards).  

Concerns of damage to the Jeera stocks due to heavy rains in key growing regions in Gujarat and Rajasthan may keep demand subdued in spot markets. The overall short supply in the spot markets due to rains in key growing areas such as Gujarat and Rajasthan may help the prices to stay firm in the coming months. Indian output during 2010-11 (Apr-Mar) is pegged at 110,000 mt from the earlier projections of 150,000-170,000 mt. In China also the output is expected to be down 20-30%. Adding to the pressure, fresh orders from overseas buyers are expected tracking lower quotes of jeera in international market of Indian origin. Indian jeera is being offered at 3,000/tonne whereas Syrian jeera is being offered at higher levels of $3,300/tonne. Any significant demand from overseas will help prices to find support and strengthen. Further, there are lower stocks till the fresh arrivals expected in the month of March which will also add to the gains. According to the market sources jeera stocks currently are projected to be lower at around 14 lakh bags as compared to 16-17 lakh bags in the same period previous year. (each bag weighs 55 kgs). Hence the near term outlook looks bullish. 

Chillies have been taking quite a beating in the past month. There has been virtually no demand from Bangladesh and Malaysia too has been buying in subdued quantities, both due to the ongoing Ramzan festival. Adding to the pressure, as per Andhra Pradesh Ministry of Agriculture, acreage under turmeric sowing has increased to 0.47 lakh hectares from 0.17 lakh hectares in the same period last year. Daily average arrivals at Guntur market were around 30,000-35,000 bags ( each bag=40 kg). Trade sources report the stock position close to 1.15 crore bags (40Kg) across Andhra Pradesh with 40 lakh bags in Guntur alone, which is very bearish for the product. Traders are in wait and watch situation as next crop estimates are likely to come in by August end which will clear picture of coming future trend. In the immediate near term things look neutral to bearish for chilli. However once the Ramzan festival finishes, then demand is expected to pick up at these very low levels.