International Spice Commodities Update – October 17, 2011

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Daily Market Reports of International Spice Commodities

Pepper futures settled lower on profit booking. Better demand and lower arrivals kept the spot price firm  at around Rs.34500 per kg. Demand from traders due to winter season and lower arrivals in major mandi are expected to support the price to further higher. As per market source, the stockiest’s in Kerala are releasing only limited stocks expecting a further rise in prices. Traders are expecting a further decline in production estimates due to diseases attack and unfavorable climatic conditions in the major pepper growing areas of Kerala. As per market source, total export of pepper from India during 2011 is estimated to be around 18000 tonnes. According to Spices board data, during January-August 2011, export of pepper from India was 13400 tonnes as against 11700 tonnes in the same period last year,  up 1700 tonnes.

Cumin futures ended on negative side due to weak trend in the spot markets. Weak demand in the spot market pulled down the prices. The spot price traded at around Rs.14800 per 100 kg, down Rs.100 from previous day. The arrivals stood steady at around 6000 bags in the Unjha market. Expiry of the front month contract also weighed on the trend. Fresh enquiries from overseas buyers are likely to support the prices in near term. Export demand is expected to rise with the onset of winter season. As per media source, Indian origin are quoting at around $3450-3500 per tonne in the international market. However higher moisture content in the soil is likely to increase the productivity. The major growing areas in Gujarat and Rajasthan received sufficient rainfall during this season. Cumin sowing in Gujarat is likely to commence by the end of October.

Turmeric October contract on the NCDEX touched the lower limit on profit booking, tracking weak cues from the spot markets. The arrivals stood at around 15000 bags in Erode spot market. Lower level buying due to the expiry of the October contract is also pressurizing the trend. Better crop prospects in major growing areas also weighed  on the trend. Despite better arrivals fresh demand from domestic and overseas buyers may limit sharp fall. As per latest data by Andhra Pradesh Agriculture Department, turmeric acreage in the state stood at around 68000 ha till 12th October 2011 compared to around 69000 ha same period previous year.

Cardamom tumbled on short selling amid higher arrivals and weak demand in the spot market. The daily arrivals for auction were reported at around 81 tonnes compared to near 33 tonnes on previous day. The price traded in the range of Rs.445-870 per kg, on an average stood at Rs.586 per kg. The buyers stayed away from the market expecting decline in prices due to higher production estimates. India’s production is estimated to be around 10350 tonnes, data by the Spices Board. Fresh crop from Guatemala is expected to hit the market by October end.

Chilli futures declined on profit booking as anticipation of rise in daily arrivals from major producing states especially from Madhya Pradesh weighed on prices. The daily arrivals stood at around 25000-35000 bags. The spot price quoted largely unchanged at around Rs.8800 per 100 kg in Guntur mandi. However, chilli may gain as output of the spice is likely to fall due to low acreage. Sowing of chilli in Andhra Pradesh, the largest producer of the spice was down 4.1 percent on year at 145731 ha as on 12th October 2011, data from the state’s agricultural department showed.

Coriander futures may trade higher on declining arrivals in spot markets and steady domestic demand. Profit booking at higher levels may limit sharp gain. Arrivals in Rajasthan markets were around 7000 bags against an average of 8500 bags a week ago. Erratic weather condition during the sowing period had decreased the acreage under cultivation. As per NCDEX report, Coriander production in 2010-11 is estimated to be around 3 lakh tonnes.

SPECIAL REPORT

Pepper falls on bearish sentiments

KOCHI: Pepper market on Monday declined on bearish sentiments and consequent liquidation/switching over after witnessing high volatility throughout trading.

Some of the investors holding validity expired stocks of farm grade pepper with them and against which they got October sales offered to release it at Rs 5 below the October delivery price following the drop in the difference between October and November delivery prices to below Rs 5 from Rs 8 in recent weeks.

This phenomenon has created a bearish sentiment in the market and the bear operators using this as a weapon tried to pull the market down.

The market witnessed, therefore, high volatility throughout and in the closing session there were said to be concerted efforts to push up and pull down the prices. There was, in fact, only switching over from October to November and December and hence, the total net open position was at just 15 tonnes. Total turnover increased by 1,310 tonnes to 6,240 tonnes, resultant mainly from the “circular trading” that took place at the closing session by one group to put the price higher and by the others to pull it down to the lowest levels, market sources told Business Line.

There was no selling pressure on the spot. Much of the domestic demand, albeit slack at the moment, is being met by supplies from the stockists from Delhi, Jaipur, Indore, Gwalior, Nagpur and so on at the current prices. Karnataka is also selling at Rs 343 – Rs347 a kg delivered anywhere in India.

This situation is facilitating the exporters to cover from the exchange to meet their overseas commitments, they said.

October contract on the NCDEX declined by Rs 140 to close at Rs 36,195 a quintal. November and December dropped by Rs 215 and Rs 225, respectively, to close at Rs 36,625 and Rs 37,100 a quintal. Total turnover increased by 1,310 tonnes to 6,240 tonnes. Total open interest moved up by just 15 tonnes to 12,010 tonnes.

Oct open interest fell by 433 tonnes to 1,409 tonnes, while that of November and December increased by 327 tonnes and 100 tonnes, respectively, to 9,254 tonnes and 1,122 tonnes.

Spot prices on lack of activities ruled steady to close at Rs 34,200 (ungarbled) and Rs 35,700 (MG 1) a quintal. Indian parity in the international market remained competitive at $8,000 a tonne (c&f), while other origins were reportedly above MG 1. A report from Vietnam today indicated 500 GL at $7,650 a tonne and 550 GL at $8,050 all f.o.b. net to shippers.

Forex Market

• The Indian Rupee opened firm tracking gains in other Asian peers. However, the Rupee pared most of its gains in subsequent trade tracking a decline in the Euro. Losses in domestic stock markets further weighed on the currency.

USD/INR pair closed at 48.95 compared to 49.01 on Friday.

• The 6-month and 1-year forward premium closed at 3.92% and 2.78% respectively against 3.98% and 2.82% on Friday.

 

CURRENCY OPEN HIGH LOW CLOSE
USD/INR 48.92 48.965 48.69 48.93


 

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