5th March, 2018 Monthly Report On SPICES · 2018. 3. 6. · It is estimated by the Federation of Indian Spices Stakeholders, the total area under cultivation in Gujarat & Rajasthan

5thMarch,2018

Monthly Report On

SPICESMarch 2018

Monthly Report On

SPICESMarch 2018

TURMERIC

Fundamentals Since the beginning of the year, turmeric prices have been crashing owing to prospects of higher crop against limited demand. The buyers are

not showing any interest in procuring the spice & this can be judged from the fact that last month, when only one bag of turmeric was sold at the Erode Cooperative Marketing Society. On the supply side, the arrivals have started and the current pace of supplies are giving an indication of a good crop in main growing regions of Telangana, Andhra Pradesh and Maharashtra. Based on these fundamentals, the price outlook of turmeric futures (Apr) is extremely bearish & in days to come it may plunge further to test 6300-6000 levels.

The sentiments are bearish amid sufficient stock availability in major markets followed by entry of new crop in small quantities and subdued domestic demand.

The new crop arrival has already started flowing into at Nizamabad and Erode markets respectively.

Prices of turmeric are seen falling with fresh arrivals from Nanded,Basmat and Hingoli region of Maharashtra hitting the market.

The buyers are not in hurry to procure at current rates due to sluggishness prevailing on the demand side. Further a downward trend is being witnessed

amid sufficient stock availability in major markets followed by entry of new crop in small quantities.

As per market sources, harvesting the new crop has started to enter the market and will extend till March.

As per traders, current stock of Turmeric in India is pegged around 22 lakh bags (70kg each).

Demand is expected to remain soft until financial year end 2017-18 on March 31 as traders will be busy in doing in account related work, said market

sources.

This season, turmeric price in the market is the reason for farmers being

unhappy in the beginning of the season itself with even the top variety fetching

less than Rs.7,000 per quintal.

It is reported that this season the yield per acre has drastically fallen to 20 quintals,

compared to 30 quintals last season. The farmers have invested up to Rs.1 lakh

per acre & and if the price is at least Rs.10,000, then it will give relief to farmers.

The Central Government has directed the spices board to open a special cell

particularly for turmeric in Telangana state.

The farmers toil on field for nine months to produce the yellow spice. The crop

after the harvest undergoes a long process of cleaning, boiling and drying

before being brought to market

Source:Reuters&SMCResearchSource:NCDEX Closingason1stMarch,2018

S3 S2 S1 Pivot R1 R2 R3

5441 5997 6287 6843 7133 7689 7979

Historic returns of Turmeric futures during monthof March

Forward curve of Turmeric futures

Demand-Supply Balance sheet of Turmeric

Particulars (Lakh Bags) (Mar-Feb) 2017-18 2018-19

Opening stock 30 22

Production 65 60

Total supply 95 82

Exports 13 13

Domestic consumption 60 60

Total demand 73 73

Ending stocks 22 9

Source: Market sources

6530.00

6584.00

7170.007170.00

6000.00

6200.00

6400.00

6600.00

6800.00

7000.00

7200.00

7400.00

April May June July

-1.63%

14.66%

43.99%

-3.77%

-14.23%

3.56%

-8.72%-10.21%

-6.65%-8.70%

-20%

-10%

0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2 3

JEERA

Fundamentals

On NCDEX, jeera prices have shed more than 18% on the national bourse from the high of 18040 levels & are currently trading near two months low owing to continuous higher arrivals in the spot markets.

It is estimated by the Federation of Indian Spices Stakeholders, the total area under cultivation in Gujarat & Rajasthan has risen by 42% to 7,57,743.93 hectares & the production is likely to be 69,23,451 bags, higher by 19% as compared to last year. Along with these, a carry forward of 2-2.50 lakh bags may add to the supply pressure. Therefore, it is clearly visible that the supply side is much heavier and this may pull down the jeera futures (Apr) to 13000 levels.

During this time, the supply is very good so far this season compared with last year mainly due to higher production estimate amid sharp rise in sowing. Arrival will increase further in the coming weeks and thus may add pressure on prices.

The harvest season has started and the arrivals in the market have increased from Gujarat and Rajasthan, two main producers of the spice.

New cumin seed supply has already started at the benchmark Unjha market and arrivals is significantly higher between 22000-25000 bags compared with 13,500 bags same period a year ago.

The average daily arrival of jeera in Gujarat is expected to nearly double to over 85,000 bags (1 bag =55 kg).

According to farmer sources in Saurashtra, a disease ‘alternaria blight’ has surfaced in select pockets of Rajkot and Jamnagar districts.

Although, as per market sources, there is no remarkable impact of the climatic extremities on jeera crop. The crop will be better than last year, hence there is not likely to be any sharp rally in prices in short-term.

Export demand at present is slow as major buyers have hold their buying or doing need-based procurement due to expectations of correction amid higher production estimate. But, exporters are maintaining optimism that exports is likely to cross 400,000 tons this year.

Until the new crop arrives at rival countries in June, India will be the sole supplier of the spice in the global market.

India cumin seed export during the first eight month (Apr-Nov) of current financial year 2017-18 rose 14.39% at 97,945.22 metric tonnes due to good demand from key buyers, according to commerce ministry data. China, Bangladesh, UAE, USA, Brazil, Nepal and Malaysia were the top buyers of Indian cumin seed this FY 2017-18. Export of Cumin seed to China this season has declined a tad, but was offset by good demand from other main buyers.

Source:Reuters&SMCResearchSource:NCDEX

S3 S2 S1 Pivot R1 R2 R3

12050 13525 14330 15805 16610 18085 18890

Historic returns of Jeera futures during monthof March

Forward curve of Jeera futures

Closingason1stMarch,2018

Production estimates of Jeera

States Area (Hectares) Yield (Kg/Ha) Production (Bags)

Current year Last year Current year Last year Current year Last year

Gujarat 332118.08 240007.2 613.6 652.2 3140138 2586607

Rajasthan 425625.85 293323 675 715 3783313 3245527

Total 757743.93 533330.2 644.3 683.6 6923451 5832134

Source: Federation of Indian Spices Stakeholders

14425.00

14715.00

15040.00

15365.00

15690.00

13600.00

13800.00

14000.00

14200.00

14400.00

14600.00

14800.00

15000.00

15200.00

15400.00

15600.00

15800.00

March April May June July

-12.24%

8.52%

-2.09%

-9.72%

-15.11%

0.38%

-12.96%

0.45%

11.34%

5.95%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

TURMERIC

Fundamentals Since the beginning of the year, turmeric prices have been crashing owing to prospects of higher crop against limited demand. The buyers are

not showing any interest in procuring the spice & this can be judged from the fact that last month, when only one bag of turmeric was sold at the Erode Cooperative Marketing Society. On the supply side, the arrivals have started and the current pace of supplies are giving an indication of a good crop in main growing regions of Telangana, Andhra Pradesh and Maharashtra. Based on these fundamentals, the price outlook of turmeric futures (Apr) is extremely bearish & in days to come it may plunge further to test 6300-6000 levels.

The sentiments are bearish amid sufficient stock availability in major markets followed by entry of new crop in small quantities and subdued domestic demand.

The new crop arrival has already started flowing into at Nizamabad and Erode markets respectively.

Prices of turmeric are seen falling with fresh arrivals from Nanded,Basmat and Hingoli region of Maharashtra hitting the market.

The buyers are not in hurry to procure at current rates due to sluggishness prevailing on the demand side. Further a downward trend is being witnessed

amid sufficient stock availability in major markets followed by entry of new crop in small quantities.

As per market sources, harvesting the new crop has started to enter the market and will extend till March.

As per traders, current stock of Turmeric in India is pegged around 22 lakh bags (70kg each).

Demand is expected to remain soft until financial year end 2017-18 on March 31 as traders will be busy in doing in account related work, said market

sources.

This season, turmeric price in the market is the reason for farmers being

unhappy in the beginning of the season itself with even the top variety fetching

less than Rs.7,000 per quintal.

It is reported that this season the yield per acre has drastically fallen to 20 quintals,

compared to 30 quintals last season. The farmers have invested up to Rs.1 lakh

per acre & and if the price is at least Rs.10,000, then it will give relief to farmers.

The Central Government has directed the spices board to open a special cell

particularly for turmeric in Telangana state.

The farmers toil on field for nine months to produce the yellow spice. The crop

after the harvest undergoes a long process of cleaning, boiling and drying

before being brought to market

Source:Reuters&SMCResearchSource:NCDEX Closingason1stMarch,2018

S3 S2 S1 Pivot R1 R2 R3

5441 5997 6287 6843 7133 7689 7979

Historic returns of Turmeric futures during monthof March

Forward curve of Turmeric futures

Demand-Supply Balance sheet of Turmeric

Particulars (Lakh Bags) (Mar-Feb) 2017-18 2018-19

Opening stock 30 22

Production 65 60

Total supply 95 82

Exports 13 13

Domestic consumption 60 60

Total demand 73 73

Ending stocks 22 9

Source: Market sources

6530.00

6584.00

7170.007170.00

6000.00

6200.00

6400.00

6600.00

6800.00

7000.00

7200.00

7400.00

April May June July

-1.63%

14.66%

43.99%

-3.77%

-14.23%

3.56%

-8.72%-10.21%

-6.65%-8.70%

-20%

-10%

0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2 3

JEERA

Fundamentals

On NCDEX, jeera prices have shed more than 18% on the national bourse from the high of 18040 levels & are currently trading near two months low owing to continuous higher arrivals in the spot markets.

It is estimated by the Federation of Indian Spices Stakeholders, the total area under cultivation in Gujarat & Rajasthan has risen by 42% to 7,57,743.93 hectares & the production is likely to be 69,23,451 bags, higher by 19% as compared to last year. Along with these, a carry forward of 2-2.50 lakh bags may add to the supply pressure. Therefore, it is clearly visible that the supply side is much heavier and this may pull down the jeera futures (Apr) to 13000 levels.

During this time, the supply is very good so far this season compared with last year mainly due to higher production estimate amid sharp rise in sowing. Arrival will increase further in the coming weeks and thus may add pressure on prices.

The harvest season has started and the arrivals in the market have increased from Gujarat and Rajasthan, two main producers of the spice.

New cumin seed supply has already started at the benchmark Unjha market and arrivals is significantly higher between 22000-25000 bags compared with 13,500 bags same period a year ago.

The average daily arrival of jeera in Gujarat is expected to nearly double to over 85,000 bags (1 bag =55 kg).

According to farmer sources in Saurashtra, a disease ‘alternaria blight’ has surfaced in select pockets of Rajkot and Jamnagar districts.

Although, as per market sources, there is no remarkable impact of the climatic extremities on jeera crop. The crop will be better than last year, hence there is not likely to be any sharp rally in prices in short-term.

Export demand at present is slow as major buyers have hold their buying or doing need-based procurement due to expectations of correction amid higher production estimate. But, exporters are maintaining optimism that exports is likely to cross 400,000 tons this year.

Until the new crop arrives at rival countries in June, India will be the sole supplier of the spice in the global market.

India cumin seed export during the first eight month (Apr-Nov) of current financial year 2017-18 rose 14.39% at 97,945.22 metric tonnes due to good demand from key buyers, according to commerce ministry data. China, Bangladesh, UAE, USA, Brazil, Nepal and Malaysia were the top buyers of Indian cumin seed this FY 2017-18. Export of Cumin seed to China this season has declined a tad, but was offset by good demand from other main buyers.

Source:Reuters&SMCResearchSource:NCDEX

S3 S2 S1 Pivot R1 R2 R3

12050 13525 14330 15805 16610 18085 18890

Historic returns of Jeera futures during monthof March

Forward curve of Jeera futures

Closingason1stMarch,2018

Production estimates of Jeera

States Area (Hectares) Yield (Kg/Ha) Production (Bags)

Current year Last year Current year Last year Current year Last year

Gujarat 332118.08 240007.2 613.6 652.2 3140138 2586607

Rajasthan 425625.85 293323 675 715 3783313 3245527

Total 757743.93 533330.2 644.3 683.6 6923451 5832134

Source: Federation of Indian Spices Stakeholders

14425.00

14715.00

15040.00

15365.00

15690.00

13600.00

13800.00

14000.00

14200.00

14400.00

14600.00

14800.00

15000.00

15200.00

15400.00

15600.00

15800.00

March April May June July

-12.24%

8.52%

-2.09%

-9.72%

-15.11%

0.38%

-12.96%

0.45%

11.34%

5.95%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CORIANDER

Fundamentals

Coriander futures (Apr) has been struggling to maintain to stay on an upside path taking support near 5400, however, is facing resistance near

5750 levels. If the counter breaks 5400 levels, a steep downside can be seen towards 5000 levels. The sentiments are bearish as the sellers on

the spot markets are trying sell their produce & taking every rise an opportunity to sell their produce.

This season, coriander production is estimated to be around 48.82 lakh bags alongwith carry forward stocks of 14 lakh bags.

In the domestic markets, for the time being there is less supply pressure as the arrivals of new crop will increase gradually and arrival will come in large

quantities will start from March till April.

On daily basis, new crop arrivals are being recorded at 3,000 bags, 3,000 bags, 16,000 bags, 2,000 bags and 3,000bags at Guna, Kota, Ramganj, Baran

and Rajkot markets respectively.

All India, average daily arrivals is seen rising to 100,000-150,000 bags (1 bag =45kg).

Demand from domestic and export buyers is not very promising at present as they are expecting some more correction during the peak arrivals season.

At present, coriander prices are more or less steady at benchmark Kota market of Rajasthan due to scattered buying and selling.

The moisture content in the spice, currently at 4-5%, is also likely to decline.

There are ample stock is available with stockists and traders hence the prices are expected to trade further lower in coming days.

Production of Coriander this year is pegged at 80 lakh bags (40kg each) due to lower sowing though the yield is expected to remain same as last year or

decline upto maximum 10%.

Source:Reuters&SMCResearchSource:NCDEX

S3 S2 S1 Pivot R1 R2 R3

4683 5032 5276 5625 5869 6218 6462

Forward curve of Coriander futures Historic returns of Coriander futures during monthof March

Closingason1stMarch,2018

Production estimates of Coriander (Dhaniya)

States Area (Hectares) Yield (Kg/Ha) Production (Tons) Production (Bags)

Rajasthan 90106 890.89 68210 1705250

Madhya Pradesh 54907 1083.77 59462 1486550

Gujarat 62600 1080 67608 1690200

Total 207613 1018.22 195280 4882000

Source: Federation of Indian Spices Stakeholders

5,499.00

5,583.00

5,667.00

5,751.00

5,350.00

5,400.00

5,450.00

5,500.00

5,550.00

5,600.00

5,650.00

5,700.00

5,750.00

5,800.00

April May June July

7%

-6%-7%

3%1%

38%

11%

16%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2010 2011 2012 2013 2014 2015 2016 2017

4 5

CARDAMOM

Fundamentals

Cardamom futures have been consolidating in the range of 1080-1200 levels, for the past two months. Factors such as low demand, lesser export demand due to volatility of Rupee & non-availability of good quality capsules have capped the upside. Last month, cardamom prices gave its steepest fall & didn’t witness any recovery due to slow-down in the domestic buying. This can be an indication that more downfalls can be seen in cardamom prices & the counter will possibly give a selling opportunity. In days to come, cardamom futures (April) is expected to drop towards 1025 levels, while any recovery due to short covering may remain capped near 1200 levels.

Small cardamom prices are slipping on change in market sentiments at auctions held in Kerala and Tamil Nadu. In spite of continuous decline in arrivals, the prices were showing an easier trend.

Supply is showing a shrinkage as the harvesting is towards final stage.

The demand for the aromatic spice is expected to be dull as the winter season is departing & this phenomenon has slowed down buying from exports is aiding the decline in the prices.

The trade source has attributed the fall in prices to inferior quality. As the harvesting has almost come to a close there is said to be a drop in size of the capsules and the colour, trade sources said.

The Individual auction average increased marginally to Rs.980.05 a kg from Rs.979.25 a kg the previous week.

Total arrivals during the current season as on February 24 stood at 18,568 tonnes and sales were at 18,104 tonnes.

The individual auction average of the season was at Rs.963.70 a kg.

The growing areas in the main cardamom growing strict in the country, Idukki, continued to experience a dry spell last week. Growers and the trade are waiting for the summer rains to arrive as per the forecasts made by weathermen.

The Spices Board has held an e-auction of small cardamom at Puttady Spice Park in Idukki, where operations were temporarily suspended for technical maintenance and upgrades. One e-auction will be held every week at the park till the maintenance work is completed.

Source:Reuters&SMCResearchSource:MCX Closingason1stMarch,2018

S3 S2 S1 Pivot R1 R2 R3

927 1006 1048 1127 1169 1247 1290

Historic returns of Cardamom futures during monthof March

Forward curve of Cardamom futures

1088.70 1092.30

1114.90

1175.00

1130.00

1040.00

1060.00

1080.00

1100.00

1120.00

1140.00

1160.00

1180.00

1200.00

March April May June July

-10.83%

5.71%

9.88%

-5.22%

27.77%

-9.42%

10.11%

-16.84%

10.57%

-4.54%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CORIANDER

Fundamentals

Coriander futures (Apr) has been struggling to maintain to stay on an upside path taking support near 5400, however, is facing resistance near

5750 levels. If the counter breaks 5400 levels, a steep downside can be seen towards 5000 levels. The sentiments are bearish as the sellers on

the spot markets are trying sell their produce & taking every rise an opportunity to sell their produce.

This season, coriander production is estimated to be around 48.82 lakh bags alongwith carry forward stocks of 14 lakh bags.

In the domestic markets, for the time being there is less supply pressure as the arrivals of new crop will increase gradually and arrival will come in large

quantities will start from March till April.

On daily basis, new crop arrivals are being recorded at 3,000 bags, 3,000 bags, 16,000 bags, 2,000 bags and 3,000bags at Guna, Kota, Ramganj, Baran

and Rajkot markets respectively.

All India, average daily arrivals is seen rising to 100,000-150,000 bags (1 bag =45kg).

Demand from domestic and export buyers is not very promising at present as they are expecting some more correction during the peak arrivals season.

At present, coriander prices are more or less steady at benchmark Kota market of Rajasthan due to scattered buying and selling.

The moisture content in the spice, currently at 4-5%, is also likely to decline.

There are ample stock is available with stockists and traders hence the prices are expected to trade further lower in coming days.

Production of Coriander this year is pegged at 80 lakh bags (40kg each) due to lower sowing though the yield is expected to remain same as last year or

decline upto maximum 10%.

Source:Reuters&SMCResearchSource:NCDEX

S3 S2 S1 Pivot R1 R2 R3

4683 5032 5276 5625 5869 6218 6462

Forward curve of Coriander futures Historic returns of Coriander futures during monthof March

Closingason1stMarch,2018

Production estimates of Coriander (Dhaniya)

States Area (Hectares) Yield (Kg/Ha) Production (Tons) Production (Bags)

Rajasthan 90106 890.89 68210 1705250

Madhya Pradesh 54907 1083.77 59462 1486550

Gujarat 62600 1080 67608 1690200

Total 207613 1018.22 195280 4882000

Source: Federation of Indian Spices Stakeholders

5,499.00

5,583.00

5,667.00

5,751.00

5,350.00

5,400.00

5,450.00

5,500.00

5,550.00

5,600.00

5,650.00

5,700.00

5,750.00

5,800.00

April May June July

7%

-6%-7%

3%1%

38%

11%

16%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2010 2011 2012 2013 2014 2015 2016 2017

4 5

CARDAMOM

Fundamentals

Cardamom futures have been consolidating in the range of 1080-1200 levels, for the past two months. Factors such as low demand, lesser export demand due to volatility of Rupee & non-availability of good quality capsules have capped the upside. Last month, cardamom prices gave its steepest fall & didn’t witness any recovery due to slow-down in the domestic buying. This can be an indication that more downfalls can be seen in cardamom prices & the counter will possibly give a selling opportunity. In days to come, cardamom futures (April) is expected to drop towards 1025 levels, while any recovery due to short covering may remain capped near 1200 levels.

Small cardamom prices are slipping on change in market sentiments at auctions held in Kerala and Tamil Nadu. In spite of continuous decline in arrivals, the prices were showing an easier trend.

Supply is showing a shrinkage as the harvesting is towards final stage.

The demand for the aromatic spice is expected to be dull as the winter season is departing & this phenomenon has slowed down buying from exports is aiding the decline in the prices.

The trade source has attributed the fall in prices to inferior quality. As the harvesting has almost come to a close there is said to be a drop in size of the capsules and the colour, trade sources said.

The Individual auction average increased marginally to Rs.980.05 a kg from Rs.979.25 a kg the previous week.

Total arrivals during the current season as on February 24 stood at 18,568 tonnes and sales were at 18,104 tonnes.

The individual auction average of the season was at Rs.963.70 a kg.

The growing areas in the main cardamom growing strict in the country, Idukki, continued to experience a dry spell last week. Growers and the trade are waiting for the summer rains to arrive as per the forecasts made by weathermen.

The Spices Board has held an e-auction of small cardamom at Puttady Spice Park in Idukki, where operations were temporarily suspended for technical maintenance and upgrades. One e-auction will be held every week at the park till the maintenance work is completed.

Source:Reuters&SMCResearchSource:MCX Closingason1stMarch,2018

S3 S2 S1 Pivot R1 R2 R3

927 1006 1048 1127 1169 1247 1290

Historic returns of Cardamom futures during monthof March

Forward curve of Cardamom futures

1088.70 1092.30

1114.90

1175.00

1130.00

1040.00

1060.00

1080.00

1100.00

1120.00

1140.00

1160.00

1180.00

1200.00

March April May June July

-10.83%

5.71%

9.88%

-5.22%

27.77%

-9.42%

10.11%

-16.84%

10.57%

-4.54%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

6

SPREADS

Source:Reuters

Daily spread of Turmeric futures (April - May)

Source:Reuters

Daily spread of Jeera futures (March - April)

Source:Reuters

Daily spread chart of Coriander futures (April - May)

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NSDL. SMC’s other associates are registered as Merchant Bankers, Portfolio Managers, NBFC with SEBI and Reserve Bank of India. It also has registration with AMFI as a Mutual Fund Distributor.

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7

Source:Reuters

Daily spread of Cardamom futures (March - April)

SPREADS

6

SPREADS

Source:Reuters

Daily spread of Turmeric futures (April - May)

Source:Reuters

Daily spread of Jeera futures (March - April)

Source:Reuters

Daily spread chart of Coriander futures (April - May)

SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related

activities. SMC is a registered member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited, MSEI (Metropolitan Stock Exchange of India Ltd.) and M/s SMC Comtrade Ltd is a registered

member of National Commodity and Derivative Exchange Limited and Multi Commodity Exchanges of India and other commodity exchanges in India. SMC is also registered as a Depository Participant with CDSL and

NSDL. SMC’s other associates are registered as Merchant Bankers, Portfolio Managers, NBFC with SEBI and Reserve Bank of India. It also has registration with AMFI as a Mutual Fund Distributor.

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7

Source:Reuters

Daily spread of Cardamom futures (March - April)

SPREADS