International Spice Commodities Update – October 25, 2011

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Weekly Market Reports of International Spice Commodities

Cumin – Cumin prices are expected to trade weak during the session. Basis is expected to widen in the coming session. Upside seems to be limited on the back of higher stock, high arrivals and expiry of 3247MT in the November contract. Demand also seems to be dull adding to the bearish sentiments. NCDEX November contract can test the support of Rs 14300-14200 with resistance being Rs 14700-14650.

Pepper – Pepper prices are expected to trade weak on the back of fresh selling. Few sellers in the spot market can support the prices. Long term fundamentals continue to be firm for the commodity. Outlook for the day is negative. We expect prices to trade in the range of Rs 35000 -33870 for the November contract.

Turmeric – Turmeric prices are expected to trade weak as fresh selling is expected in today’s session. Prices continue to be lower than the spot price. Lower arrivals and domestic buying will support the prices. NCDEX November contract can test the support of Rs 4750-4700 with resistance being Rs 5050-5000.

Coriander – NCDEX Coriander is expected to trade weak on fresh selling. Lower arrivals and fresh buying can support the prices. Outlook for the day is negative. NCDEX November contract can test the support of Rs 5300-5250 with resistance being Rs 5500-5500.

Chilli– Chilli prices are expected to trade firm on the back of lower sowing data. Weather concern will keep the downside limited. Price outlook for the day is positive. We expect NCDEX November contract to test the support of Rs 8300-8200 with support being 8550-8500.

Special Report

Spices Board to push ahead with re-plantation, rejuvenation of pepper

Coonoor: The Spices Board has achieved re-plantation and rejuvenation of pepper in about 8,000 hectares. Speaking at the 118th Upasi (United Planters Association of Southern India) annual meet on commodity outlook for spices, Mr P. M. Suresh Kumar, Secretary, Spices Board, “So far about Rs 16.38 crore has been disbursed, and support for production improvement in States is continuing.”

Re-plantation and rejuvenation of pepper in Wayanad district, Kerala and the north-eastern region are on with a total outlay of Rs 100 crore. The Board has provided financial assistance of Rs 53.28 crore.

The development programme has been recommended by the Karnataka Horticulture Mission to the Agriculture Ministry. Approval is awaited. The total outlay for the State is Rs 119.70 crore and is likely to cover 5,000 hectares. A similar programme for Tamil Nadu is pending with the State horticulture department. The total outlay is Rs 13.84 crore, and is likely to cover 4,000 hectares.

Cardamom too

According to Mr Suresh Kumar, the Board is making similar efforts at re-plantation and rejuvenation of cardamom as well, to increase the output from 10,000 tonnes currently to 15,000 tonnes. The total financial outlay of Rs 200 crore is planned for the scheme, with the Board’s share being Rs 122 crore. So far we have done re-plantation in 8,800 hectares and rejuvenated 6,400 hectares, he added.

Market promotion

The Spices Board is also planning to help in market promotion. As a step towards this, a market study for enhancing the domestic consumption of cardamom by Bangalore-based Indian Institute of Plantation Management (IIPM) is planned. The Board is also looking to air jingles through All India Radio in consuming centres.

Plantation welfare

The Board has introduced a personal accident insurance scheme (PAIS) for cardamom growers and workers through a price stabilization fund trust (PSFT) operated by the Commerce Ministry. Mr Kumar said the “premium for the grower/worker is Rs 22 a year, of which, 50 per cent will be met by the PSFT. Insurance coverage is for Rs 1 lakh.”

Turmeric dips on heavy inflows

Erode: Spot turmeric prices decreased by Rs 200-500 a quintal on Monday.

“Because of the three-day Diwali holidays , farmers brought more than 17,000 bags of turmeric on Monday. Due to such heavy arrivals, the prices declined by Rs 200 a quintal. However, since good quality hybrid variety arrived for sale, those traders who quoted Rs 200 a quintal higher for the commodity purchased the produce. Still, farmers have retained more than 10 lakh bags of turmeric, and intend to bring them to the market”, said Mr R.K.V. Ravishankar, President, Erode Turmeric Merchants Association.

He said turmeric futures decreased by Rs 150 a quintal. This was reflected in the local market and traders quoted a lower price. Further, no new orders were received by traders from North India, so sales were about 45 percent of the arrivals. Due to poor sales, farmers were frustrated, he said.

Mr Ravishankar said turmeric prices decreased by Rs 500 a quintal at the the Erode Cooperative Marketing Society. At the Regulated Marketing Committee, sales were lower and the price declined by Rs 300 a quintal.

Over the past one week, turmeric prices have fluctuated between Rs 4,500 and Rs 5,500 a quintal, and it may move in this band for another month. If heavy arrivals are seen , then prices may decrease sharply. At the Erode Turmeric Merchants Association sales yard, the finger variety was sold at Rs 3,894-5,486 a quintal and the root variety at Rs 3,509-4,859 a quintal.

Salem crop: The finger variety fetched Rs 5,111-5,710 and the root variety Rs 4,861-5,200. Out of 3,915 bags that arrived, 806 were sold. At the Gobichettipalayam Agricultural Cooperative Marketing Society, the finger variety was sold at Rs 4,452-5,359 and the root variety at Rs 3,569-4,810. Out of 388 bags kept ready for sale, 346 were sold. At the Erode Cooperative Marketing Society, the finger variety was sold at Rs 4,111-5,106 and the root variety at Rs 4,204-4,999. Of the 1,722 bags that arrived, 1,339 were sold.

Pepper crashes on bearish reports

KOCHI: Pepper on Monday crashed with the contracts dropping to below the lower circuit level (lowest permissible trading rate of the day) on bearish reports from Vietnam and bearish activities from other quarters, according to trade sources.

Nov contract fell Rs 1,215 to close at Rs 34,330 a quintal while Dec and Jan dropped Rs 1,170 and Rs 1,205 respectively to close at Rs 34,705 and Rs 35,050.

Total turn over increased 14,439 tonnes to 17,181 tonnes. Total open interest increased 772 tonnes to 12,249 tonnes showing good purchases and yet the market fell, market sources told Business Line. Nov, Dec and Jan open interest increased 466 tonnes, 300 tonnes and two tonnes respectively to close at 10,096 tonnes, 1,881 tonnes and 149 tonnes. Spot prices fell in tandem with the futures market trend and not on any selling pressure by Rs 500 to close at Rs 33,300 (ungarbled) and Rs 34,800 (MG 1) a quintal.

Investors holding short position/sales in the exchange platform covered back their sales and released farm grade pepper at Rs 10 below the Nov delivery price. Leading exporters and others were covering and that in turn led to nearly 85-100 tonnes reportedly being traded in several directions. Bearish reports from Vietnam coupled with bearish activities from international free trade zones in domestic futures have influenced the market to touch the second lower circuit level today, they said. Everybody was taking advantage of every dip, they said. The materials traded were all from the investors.

Indian parity in the international market was at $7,550 a tonne (c&f) for Europe and $7,850 for the US and remained competitive, despite the decline in Vietnam prices. However, Indonesia was reportedly offering L Asta at around $8,500 a tonne.

Forex Market:

USD/INR: USDINR came off its 30-month highs touched on Friday and closed at 49.83 yesterday. Although the slight gains in the Dollar could support the currency pair, the general air of optimism around the EU simmit is likely to cap the gains. However, Dollar demand by crude importers ahead of the month-end and payment for high gold imports during the festive season could weigh on the Rupee. Market would also take cues from the equities for intra-day movement, with a 25 bps rate hike by the RBI in the offing. Technically, we expect USDINR to trade bullish today, with support at 49.80 and resistance at 50.09.













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