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Weekly Commodity Research Reports

Spices Weekly from 14th January - 19th January 2013

Pepper :The spot market traded high traders covered their demand from stockiest, farmers continued to be on the sidelines and are not selling at the current low prices. Indian pepper spot prices gained by 8.98% in last week. Buying on the futures counter supported the upside in the spot prices.

Black pepper un-garbled offered at Rs 38,300 per quintal and MG-1 at Rs 39,300 a quintal in spot market. Traders say, black pepper remained firm on well domestic demand and tight supply. In the international market Indian black pepper for Europe quoted at USD 7,800 per ton and February shipment offered at USD 6,900 per ton C&F and at USD 7,000 per ton C&F. Vietnam and Indonesia Asta variety offered at USD 7,000 per ton and Malaysia Asta offered at USD 6,950-7,000 per ton FOB Feb-March.

Traders say, farmers are not bringing black pepper in the market and on better prices they are selling cardamom. Meanwhile, dealers from Tamil nadu are directly purchasing the black pepper on primary market price. Black pepper production is expected around 55,000 tons and carryover stock reported around 10,000 tons. In this way total availability of black pepper will be around 65,000 tons in 2013. Among this, 45,000 tons of black pepper will be fro domestic use and 15,000 tons will be exported and 5,000 tons will be for carry forward. The total export of pepper during the year 2012 is estimated at 253,000 tons valued at US$1.725 billions, which is higher by 1% in quantity and 13% in value, compared to the export achieved during 2011.

Traders told that crop harvesting is not increasing due to bad weather. While, demand reported to be good of high bulk density black pepper from Mumbai and Delhi. Tamil nadu based dealers are buying directly from farmers to cater Pongal demand.

Entering the second week in early 2013, the pepper market seems to be more active. Pepper markets in most of all origin have shown an increasing trend as the domestic and overseas demand is picking up after the long X-Mas and Yearend holidays. Overseas buyers seem to start taking coverage after the long holiday. Pepper futures on Mumbai based NCDEX have shown an increasing trend due to the domestic demand mainly from North of India. When compared to the average prices of last week, February contract has increased by 1%. FOB price also moved up by 1% from average of US$6,893 to US$6,953/ mt. In Lampung, local pepper prices in term of local currency also firmed, however in US$ term, prices have decreased by -1%, due to the Rupiah depreciation against USD currency. In Sarawak, local prices also declined marginally by -1% while FOB recorded an increase of 2% from an average of US$6,440 / mt to US$6,500 mt. In Vietnam, local pepper prices were also reported to be firm at the average of US$5,678/mt. FOB pepper prices for 500g/l and 550g/l were also firmed at the level of US$6,150/mt and US$6,350. In Brazil, it was reported that market was still not very active and it is expected to pick up by next week. January shipment are priced at around US$6,200 / mt.

Outlook: Futures prices has declined for the new crop as the lower prices are not supported with demand. Profit booking can also support as pull back in prices. We expect prices to be firm for the week. Long term fundamentals continues to be bearish on higher supplies and stable rise in consumption of India. We expect prices to witness buying in current week with price expectation of Rs. 37500-37800 for NCDEX February contract. Near term top is seen at Rs 35000-35300.

Jeera : Spot cumin seed quoted down by 250-300 per quintal. Spot cumin seed offered weak with tandem to the spot market. Export demand reported from Middle East, Europe and Bangladesh. Sowing in Gujarat has been 102% compared to normal season at 324000 h.a v/s 364900 h.a. in last year.

New cumin seed medium quoted at Rs 2,270-2,370 per 20 kg, NCDEX quality raw quoted at Rs 2,580-2,680 per 20 kg at Unjha market of Gujarat. At Unjha market cumin seed arrival stood at 1,500 bags and traded around 2,000 bags. New cumin seed arrival reported around 25-30 bags in the market. In the international market, Indian cumin seed one percent quoted at USD 2,875-2,900 ton (cnf) Singapore. However, Turkey and Syria are not offering. Sowing in Turkey and Syria will be in March. Traders viewed current demand as slack but felt that since the situation in Syria seemed to be getting worse on a daily basis, buyers might deem it prudent to take some coverage soon. The most importers would favour Syrian material on quality considerations whereas with India much more effort and cost was involved in finding cumin seed free of any pesticide residue. In Syria some delays are witnessed every once in a while but shipments have been moved out of the country. The biggest problem seems to be the internal transport from the fields to the factory and from the factory to the port.

Outlook: With dull export demand and good carry over stock prices in the near term are expected to be under pressure. We expect prices to test the support of Rs. 13200-13300 for NCDEX March contract with a resistance of Rs. 14250-14300.

Turmeric : Turmeric quoted stable as spot prices were quoting lower than futures. Exporters lacked any fresh orders keeping the upside capped. Spot prices traded marginally higher than the futures prices. Prices in last 1 month has gained by 9.4% in Nizamabad mandi.

At Sangli, Turmeric traded firm in Sangli, Nizamabad and Erode, while trend was weak in futures market. Turmeric finger priced at Rs. 6,400 per quintal in Erode, root variety quoted at Rs 6,800 Salem per quintal, Salem finger at Rs 7,200 per quintal and Salem root at Rs 6,800 per quintal. Arrivals stood at 6,000 bags. Unpolished finger variety offered at Rs 5,800 per quintal and gatta at Rs. 5,400 per quintal in Nizamabad. Trade of 1200 bags was reported in Nizamabad. At Sangli, Rajapuri powder quality was available at Rs. 6,100-6,300 per quintal, Rajapuri powder medium quality at Rs. 6,500-7,000 per quintal and desi kadappa at Rs. 5,800-6,100 per quintal.

Outlook: Speculative buying in April contract with no stock to offer till March 2013, downside in prices will be capped. In the near term the futures counter is expect to gain. Spot situation has not seen any drastic changes. FED stock of around 5601MT has expired in Dec contract. Outlook for the week is negative. We expect Rs.6250-6200 as the support and we see Rs. 6800-6900 as top of the week basis NCDEX April contract.

Dhaniya : Coriander traded higher in the spot market on lower sowing and weather disruption in key growing areas. As per trader's estimate sowing is less by 30% to 50% compared to last year. Weather department warning of extreme cold weather in Rajasthan and Gujarat led to speculative buying on the futures counter. Prices gained by 8.62% in last week. Coriander gained further by Rs 200 a quintal in Kota Tuesday on expectation of lower output and sharp upward moves in futures. Coriander output is expected to decline by 50 percent to 5-6 million bags in Rajasthan and Madhya Pradesh. Andhra Pradesh and Maharashtra based stockiest increased the purchasing due to fear of lower output. Coriander Badami loose new quoted at Rs. 5,050 per quintal, eagle loose at Rs.5,250 per quintal. New scooter variety sold at Rs. 5,450 per quintal. Coriander arrival was 4,000 bags in Kota, 5,000 bags in Ramganj, 4,000 bags in Baran, 3,000 bags in Guna and 2,000 bags in Khumbhraj (each bag=40 kg).

Outlook: Short squeezing in Jan contract and with no fresh crop to deliver till March, the bull speculators will have an upper hand on the futures market. With Dhaniya stocks gaining above 9000Mt on NCDEX and with sharp surge in prices in last month, we expect profit booking during the week. Outlook for the week is positive. Prices are expected to test the resistance of Rs. 7450-7500 for NCDEX April contract. We see Rs. 6800-6750 as medium term support.


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