Transcript A comprehensive update on Spices

9 June 2010
A comprehensive
update
on
Sp ces
Pepper
International Pepper Community has lowered 2010 world pepper output by
9,000 tonnes to 2,70,650 tonnes as compared to 2,79,650 tonnes in 2009
Unfavourable weather condition in Brazil, Indonesia and Vietnam resulted into
drop in output
Vietnam had shipped 80,000 tonnes of pepper in first 5-months of CY2010 and
left with 40,000 tonnes till new crop in 2011
Pepper
India MG-1 ASTA is at $3650 per tonne while Vietnam ASTA is at $3630 per
tonne, Brazil is at $3600 per tonne FOB Belem and Indonesia is at $3675 per
tonne FOB
Now, rates of all the major pepper producing countries is at par in the
international market
India being preferred for quality, there are expectations of good demand for
Indian pepper
Moreover, in the spot market, supplies are remaining limited as sellers are not in
a hurry to sell
World pepper balance sheet
Supply (tonnes)
Production
Carry forward stocks for 2010
Total
Demand (tonnes)
2,79,650
Consumption
3,20,000
79,124
Carry forward stocks for
2011
72,082
3,58,774
Total
3,92,082
Shortage: 33,308
India pepper balance sheet
Supply (tonnes)
Demand (tonnes)
Production
40,000
Domestic consumption
45,000
Imports
14,000
Exports
25,000
Ending stocks of 2009
11,350
Carry forward stocks
10,350
Total
65,350
Total
80,350
Shortage: 15,000
Source : IPC
Pepper futures are expected to trade on a positive note supported by the
fundamental factors of tight supply amid expectations of good demand.
Recommendation: Pepper NCDEX: Medium term: Buy in the range 13500-14000
targeting 17000 then 18000 with stop loss at 12000
Jeera
For 2010, India’s jeera production is estimated to be higher by 11% at 1.5 lakh
tonnes Y/Y
Syria, Turkey and Iran are the three major Jeera producing countries besides
India in the world
Syria crop is expected to be same as that of last year to around 25,000 tonnes,
while Turkey and Iran crops are expected better than last year to around 15,000
tonnes for each
As a result of good crop in major countries—world jeera production is likely to
be higher by 13% to 2.14 lakh tonnes Y/Y
Syria new crop harvest has started while Turkey and Iran new crop will come to
the market July month onwards
Jeera
Presently, Unjha market—largest market in India—is witnessing a limited arrivals
at around 3,000-4,000 bags (1 bag = 60 kg) against 25,000-35,000 bags during
peak arrival period (Feb-Apr)
Arrivals will start easing from the month of July and this is expected to render
some upside support to prices
Export demand is remaining steady with demand limited to Middle East countries
In the international market, Indian rate is in the range of $2,460-2,600 per tonne
while Syria rate is $2,200 per tonne and Turkey rate is $2,240-2,460 per tonne
During the monsoon season spot market activity remain subdued with limited
participation among buyers and sellers
Indian jeera balance sheet
Demand ( tonnes)
Supply (tonnes)
Production 2010
Imports
Carry forward
Total
1,50,000
Domestic consumption
1,40,000
0
Exports (expected by March
2010)
35,000
36,000
Ending stocks
11,000
1,86,000
Total
1,86,000
Balanced
* All are trade estimates
With supply pressure continuing from the major competitors Syria, Turkey and
Iran, export demand is expected to remain steady for Indian jeera as of now
Jeera outlook
Near term : Bearish : Weak export demand amid sustained arrivals ; and timely
and normal monsoon expectations
Long term : Bullish : expectations of export demand by the month of
September - October; crop sowing progress will be an important factor to watch
for
Recommendation: Jeera NCDEX: Buy in the range 11200-11400 targeting 14000
with stop loss below 10000
Turmeric
Turmeric production in 2009 remained around 2.94 lakh tonnes, down by 20% Y/Y
Production in 2010 is expected to up 30% to 3.85 lakh tonnes
However, carry-forward stocks are nearly 7,000 tonnes in spot market—resulting to
tight supply
Arrivals have gradually come down to 500 bags at Nizamabad market and 5000
bags at Erode market (1 bag = 70 kg)
Spot rate is hovering around Rs.14,500 per quintal at Nizamabad market and
Rs.15,000 per quintal at erode market
Export demand is expected to gain by the month of July-August, which might
render upside support to prices
Turmeric
Domestic demand is remaining subdued but market participants are expecting
revival in demand at these lower levels in coming days
Report of normal and timely monsoon is expected to result in increase in acreage
by nearly 30% during this year’s kharif season
Last year acreage was around 1.2 lakh hectares
During monsoon season supplies decrease further, which might support the rise in
prices
Monsoon progress across the major growing areas in coming days will be an
important factor to watch for
If, monsoon remains normal and timely, it might act as a limiting factor for sharp
rise in prices
India’s turmeric balance sheet
Supply (tonnes)
Production
Ending stocks of 2009
Total
Demand (tonnes)
3,85,000
Domestic consumption
3,20,000
7,000
Exports
51,000
3,92,000
Total
4,01,000
Shortage: 9,000
* All are trade estimates
Turmeric prices are expected to trade higher in coming days supported by the
factors of gaining demand amid easing arrival pressure. Export demand is
expected to gain in coming days which is also supportive for rise in prices.
NCDEX has modified the turmeric contract specifications ; Trading and
delivery unit: 5 MT from 10 MT; Tick Size: Rs.2 from Rs.1. This will be in
force from 10th June 2010 for all existing contracts.
Recommendation: Turmeric NCDEX: Buy in the range 13000-13300 targeting
16000 then 16600 with stop loss at 11700
Chilli
Chilli production for 2010 is expected to be higher by 10% to 13.2 lakh tonnes
Y/Y
The crop has been good in Andhra Pradesh, but lower in other major chilli
producing states namely West Bengal and Tamil Nadu
Total number of cold storages in Guntur has increased to 83 this year. Hence,
the storage capacity has increased from 50 lakh bags last year to nearly 70 lakh
bags this year (1 bag = 35 kg)
Despite the increase in number of cold storages, almost all the cold storages are
full to their capacity
The major market at Guntur was closed for one month from 07 May 2010 to 07
June 2010 due to increasing mercury levels
Chilli
Market activity is expected to resume gradually in coming days
Export demand is expected to be good this year
China is one of the major competitor for India and its crop has been estimated to
be lower by 40% this year
India exports mainly to Malaysia, Bangladesh, Srilanka, U.S.A.,U.A.E. and
Pakistan
Lower Chinese crop is expected to help sustain the export demand for Indian
chilli
Balance sheet of India chilli
Supply (tonnes)
Production
Ending stocks of 2009
Total
Demand (tonnes)
13,20,000
Domestic consumption
11,50,000
50,000
Exports
2,00,000
13,70,000
Total
13,50,000
Balance: 20,000
* All are trade estimates
Monsoon progress across the major growing areas in coming months can give
a fresh direction to prices
Chilli prices are expected to trade higher in coming days as there are
expectations of good export demand for Indian chilli due to lower china crop.
Arrivals are remaining limited to the physical market as market participants are
expecting rise in prices
Recommendation: Chilli NCDEX: Buy above 5100 targeting 5600 then 6000 with
stop loss at 4300 (or) Sell below 4250 targeting 3700 then 3400 with stop loss at 5000
Cardamom
Cardamom production in 2009 was lower by 14% to 9,500 tonnes Y/Y
Production for 2010 is expected to be higher by 15% to 11,000 tonnes
According to market sources, even rise in production in 2010 would fall short of
demand due to drop in output in Guatemala
During 2009, Guatemala crop was lower by nearly 60% to around7000 tonnes
India is the major supplier of cardamom across the globe as of now
Hence export demand prospects are very good for Indian cardamom and
expected to be sustained till the new crop in 2011
Cardamom
Cardamom fresh arrival season starts from the month of May and continues till
July
This year arrivals are remaining limited in the range of 15,000-17,000 kgs
against the usual arrivals of 25,000-30,000 kgs during the peak season
Active export and domestic demand are the major supporting factors for rise in
prices
MCX has levied 5% special margin in cash applicable in cardamom contracts
effective from 10 June 2010
Thus, special margin on buy side is now 25% and a 5% special margin is also
there on sell side
Balance sheet: Indian cardamom
Supply (tonnes)
Production
Ending stocks of 2009
Total
Demand (tonnes)
11,000
Domestic consumption
10,000
1,000
Exports
2,000
12,000
Total
12,000
Balanced
* All are trade estimates
Export demand will remain the major trigger for cardamom prices this year
Cardamom prices are expected to trade higher in coming days as there are
expectations of good export demand
Recommendation: Cardamom MCX: Buy in the range 1740-1700 levels targeting
2000 then 2100 with stop loss at 1500
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