Daily Report of International Spice Commodities
Pepper futures traded within a tight range since the buyers and sellers waited for further directional cues. Market lacked fresh triggers to catch up momentum. Spot prices remained steady and traded near Rs 27000 per quintal. International price for MG1 traded within a range of $6200 to $6350 per ton and except MG1 grade, prices of all other origins increased. Arrivals were reported in Indonesia and Malaysia and as per media reports production expectation from these countries are not encouraging. As per IPC estimates the production in Indonesia is expected around 37000 tons while that of Malaysia and Brazil were expected near 25000 tons and 34000 tons respectively. Harvesting in Brazil is expected to start from August onwards. However Vietnam decision to increase the export quota can increase the supply in international market. Vietnam had already exported 54480 tons of pepper which is expected to be half of its yearly production.
Cumin futures edged higher on spot demand and fresh enquiries on export. Arrival in the spot market had shown a declining trend due to the arrival of monsoon in the major production belts. High moisture content can erode the quality of Cumin and this can create more hurdles in arrivals to physical market. Spot prices remained weak and traded near Rs 13000 per quintal. Fresh arrivals were reported near 4500 bags compared with 5000 bags in the previous day. Syrian and turkey crop is expected to reach in the international market on mid of July onwards. As per media quotes, overseas demand from Bangladesh as well as middle east is expected to increase in near future. And the reported poor quality produce from Syria will give more competitive edge to Indian cumin seed in the international market.
Turmeric futures ended with marginal loss on profit booking. More demand from North Indian buyers and bulk dealers supported the sentiments. As per the last update, Spot prices in Nizamabad traded near Rs 7600 per quintal and fresh arrival were reported near 1000 bags compared with 2000 bags in the previous day. Spot prices in Erode traded near Rs 8000 per quintal and arrivals were reported near 8000 bags compared with 820 bags in the previous day. According to media quotes, more promising business is expected only from August onwards. Lower prices in the physical market and below normal rainfall prediction from IMD augmented the worries of the farmers. Due to this turmeric cultivation in the major growing areas is getting slow paced.
Cardamom futures ended with marginal loss on increased arrivals. Favorable climate in the growing region also supported to sentiments. However upcoming festival demand especially Ramdhan is expected to increased the demand in near future. And more demand from East Asian countries is expected during this period. According to last updates, average spot prices improved and traded near 659.21 per ton and arrivals are reported near 13 tons compared with 58 tons previous day. According to trade estimates production in India is slightly higher than 11000 tons. As per the estimates of spices board the production in Guatemala expected near 20000 tons. As per media sources , total arrivals during the current season from August 1 to June ,2011, stood at 10856 tons which is approximately six percent higher than last year arrivals.
Chilli futures edged lower on slow down in demand. As per media sources, improvement in overseas demand from Srilanka, Thailand and Malaysia limited the downside. As per last update, spot market prices traded near Rs 7800 per quintal and fresh arrivals were reported near 23000 bags compared with 35000 bags in the previous day. As per market sources, total stock in Guntur is expected around 47-48 lakh bags, out of this quality produce is expected around 30-35 lakh bags. As per Andhra Pradesh government estimates as quoted in the media, the Chilli sowing shows a declining trend and major production belts received moderate rainfall. It is 17 percent less than previous year.
Coriander futures escalated on improved demand scenario. Spot prices in Kota traded near 4200 per quintal and arrivals were reported near 3000 bags. Total arrivals were reported at 13000 bags. Usual arrivals season starts from February and extend till May end. Total carry over stocks has been estimated 25-30 lakh bags. As per trade sources estimation, production is expected around of 60-65 lakh bags due to lower acreage of cultivation. Erratic weather condition during the sowing period had decreased the acreage under cultivation.
SPECIAL REPORTS (Business Line)
Cardamom declines on sluggish demand
Cardamom prices fell by Rs 9.40 to Rs 887.10 per kg in futures trading today as speculators reduced their positions due to weak trend in the spot market on sluggish demand.
At the Multi Commodity Exchange, cardamom for delivery in October declined by Rs 9.40 or 1.05 per cent to Rs 887.10 per kg, with a business turnover of 43 lots.Similarly, the spice for delivery in July lost Rs 2.90 or 0.36 per cent, to Rs 792 per kg, with an open interest of 76 lots.
Analysts said fall in demand at existing higher levels against adequate stocks in the physical market mainly led to a fall in cardamom prices at futures trade.
Pepper prices shoot up
Pepper futures shot up on Thursday, hitting the second upper ceiling on good buying interest amid limited availability.According to market sources, the operators who had already invested an estimated Rs 200 crore in pepper buying around 4,300 tonnes, were on a buying spree .
“The operators have pushed up the prices, in fact the market is controlled and run by them at their whims and fancies. It is not good for the trade,” market sources told Business Line.
Overseas buyers might cover before they go on summer holidays but from where they will buy remains uncertain. Availability is claimed to be limited in almost all the origins, they said.
Indian parity today has shot up and remained out priced at $6,600 a tonne (c&f) for Europe and $6,700 a tonne (c&f) for the US. High fluctuations on the exchange market have been dissuading the exporters to make any commitments, they said.
Activities on the market was limited today as is evident from the turn over. Switching over and additional buying was also not much and yet the market shot up, they said. Despite a decline in the total open interest, the market soared, they said.
July contract on the NCDEX increased by Rs 1,080 to close at Rs 28,068 a quintal. August and September shot up by Rs 1,100 and Rs 1,116, respectively, to close at Rs 28,579 and Rs 28,997 a quintal.
Total turnover moved up by only 762 tonnes to close at 6,599 tonnes. Total open interest dropped by 137 tonnes to 12,887 tonnes.July open interest fell by 595 tonnes to 4,657 tonnes.August and September moved up by 395 tonnes and 33 tonnes, respectively, to 6,057 tonnes and 1,338 tonnes.
Spot price in tandem with the futures market trend and on limited supply shot up by Rs 600 to close at Rs 27,000 (ungarbled) and Rs 28,000 (MG 1) a quintal.
Clove prices spiral as demand outstrips supply
Clove prices have soared in the domestic market as demand has outstripped supply. According to dealers and growers in the major growing and supply centre, Nagercoil in Tamil Nadu, the price of the good variety has crossed Rs 800 a kg.
“The price has crossed Rs 800 a kg. Some traders have resorted to selling, while some others are holding back, in the anticipation that the price will touch the magic four-digit figure,” Mr Subramani, a major cloves grower in Nagercoil, told Business Line today.
The price has, of late, multiplied nearly four-fold on short supply as the last crop in India was less than half the normal output estimated at 2,500 tonnes. Indian demand is estimated at between 13,000 and 15,000 tonnes, said market sources.
There is a huge shortage of cloves in India as good quantities were exported to Singapore and Indonesia at $12,000 to $17,000 a tonne, following a sharp rise in prices in recent weeks, the trade sources said.
They added there would be a huge vacuum here with the festival season around the corner, they said.
Prices in India for Colombo cloves was Rs 750 a kg and that for Zanzibar Rs 900. “The import costs are very high and given the current trend, we see cloves prices hitting Rs 1,000 to Rs 1,200 a kg.”
Crop failure in Indonesia on account of disease has led to a sharp drop in production. It is expected to take three-four years to return to normal conditions. As a result, “clove prices will remain high till 2014. New crops take nearly four years to grow and fruit, while on the other side, demand from the Indian and world market is growing,” they said. The latest development is that China has also been buying huge cargoes of cloves, pushing prices up further,” trade sources in Bangalore told Business Line.
The annual world cloves crop usually is at 1,41,000 tonnes, with Indonesia accounting for 1,10,000 tonnes. At the same time, it also consumes around 1,20,000 tonnes, they said. “This year, the Indonesian crop is only 10 per cent, i.e., 10,000 tonnes while the output of all others when put together came to 28,000 tonnes. Thus, the total world cloves crop is estimated at 38,000 tonnes. Given this huge deficit, cloves prices are at $21,000 a tonne now and it may climb to $30,000 a tonne soon,” they claimed.
Indonesia cigar companies “must have buffer stocks, so they need one lakh tonnes and hence the Indonesian Government’s trade ministry is reported to have issued import permits for 50,000 tonnes, so they have been buying goods from wherever they can at prices ranging from $11,000 and $17,000 a tonne. This phenomenon will reduce stocks in the world market, pushing the prices up further, they said.
The new crops in the Comoros, Zanzibar, Brazil and Madagascar “are also small; all these are getting booked in forward sales. With Indonesian cigar companies buying up crops, the local Indian markets will soon dry up. It will see Rs 1,200 a kg, it is good time for traders to buy cloves and hold them for a while,” the market sources said.
‘Good rains’ for India in Aug-Sept, say Japanese experts
Japanese researchers have concluded that the 2010-11 La Nina, which brought a normal monsoon last year marked by occasional flooding events, faded out fully in June.
La Nina is the periodical ocean phenomenon marked by cooling of the east-equatorial Pacific waters and warming of the west, and has mostly coincided with a good Indian monsoon, though without direct cause-effect relationship.
But researchers at the Tokyo-based Regional Institute for Global Change (RIGC) have maintained their forecast for the return of La Nina conditions towards the autumn.The Climate Prediction Centre of the US National Weather Services too had come out with an outlook recently suggesting the return of La Nina later this year.In what is a good sign for the Indian monsoon, the RIGC has also said that the La Nina would be accompanied by a ‘weak positive Indian Ocean Dipole’ from August to November.
The India Ocean Dipole (IOD) is a seesawing of ocean water temperatures in west and Indian Ocean, closely resembling the El Nino-La Nina phenomenon in the equatorial Pacific but with more direct and immediate impact on Indian monsoon.
When the ocean water temperature is high in west Indian Ocean relative to the east, it is said to be a positive IOD phase, and vice versa.A positive IOD is seen as boosting the prospects of a concurrent Indian monsoon and hence the RIGC outlook for good rains, despite the ‘weak’ IOD credentials.
In its draft outlook statement, the RIGC said most of India would have good rains, even flooding events, during late summer (August-September-October) associated with the influence of La Nina and the emerging positive IOD.
The IOD event may be related to current sub-surface cooling condition in the eastern equatorial Indian Ocean. This would also mean that warmer-than-normal sea surface temperatures would persist west of Australia during the following months.
The Indian Rupee opened strong tracking broad-based Dollar weakness. However, its rise was capped owing to the intraday fall in the Euro. Lacklustre performance by the domestic stock market also weighed on the domestic currency. USD/INR pair closed at 44.49 compared to 44.52 yesterday.
The 6-month and 1-year forward premium closed at 6.08% and 5.21% respectively against 6.11% and 5.28% yesterday.