Jeera may face resistance after gaining on demand, tight supplies 

Jeera (cumin) prices have gained over the past few weeks on robust domestic and export demand besides tight global supplies, analysts said. But some blame speculation for the rise following a sharp fall and say they hit the resistance level last week. 

Rates on the futures market increased by nine per cent last week, gaining the most in the spices complex, according to Anu Pai, Research Analyst at Geojit Financial Services.

“Farmers holding back their stocks on expectation of better prices too bolstered prices. However, the expectation of higher production could weigh on the compled,” she said.

Speculative calls

Agreeing with her view, Jagdeep Grewal, CEO of Shreeji Agri Commodity Pvt Ltd, said due to continuous fall in prices and with sellers having sold ample quantities to meet the demand, they have adopted a “wait and watch” policy.

“At the same time, the market is being flooded with speculative calls, miscalculations of the crop estimation, including lower crop production overseas,” he said.

“It (the rise) is more of speculation than any firm fundamental reason. Prices had dropped sharply and hence, there is a corrective upward movement,” said Ankit Agarwal, Director of Erode-based Amar Agarwal Foods India Pvt Ltd.

Spot, future prices

The modal price of jeera (rates at which most trades take place) at the Unjha Agricultural Price Marketing Committee (APMC) yard in Gujarat surged to ₹30,750 a quintal last week from ₹22,850 on May 1. 

In the futures market, the June contract on NCDEX topped ₹30,000 a quintal last week before dropping to ₹28,640 at close on Wednesday. 

During the same time a year ago, prices at Unjha APMC yard were ruling at over ₹40,000 a quintal. In the futures market too, prices ruled over ₹40,000. 

Grewal said since jeera prices touched a record high during August-September 2023, they dropped over 70 per cent from the peak. From mid-April, prices have gone northwards by 35 per cent. 

30% higher crop?

Jeera prices soared after the crop was affected in 2021-22 and 2022-23 due to the vagaries of the weather – first a heat wave and then unseasonal rains. The production dropped to 5.56 lakh tonnes and 6.27 lakh tonnes, respectively. 

According to SMC Global online, this season jeera production is likely to be 30 per cent higher this season at 8.5-9 lakh tonnes on a substantial rise in cultivation area. The sowing area in Gujarat increased by 104 per cent and in Rajasthan by 16 per cent. 

Pai said high prices last year resulted in jeera exports dropping 21 per cent in the April-February period of the 2023-24 fiscal to 1.32 lakh tonnes.

If estimates go wrong…

Grewal said the higher crop estimate still holds good. However, prices may have gained as the pipeline does not have significant surplus stock. 

However, prices could have hit the resistant level last week and any rise may only be in the case of the crop estimates going wrong. If sellers hold on, then, too, prices could see some upside, he said.   

Agarwal said though traders may talk about demand from China, there was nothing like that and prices may trace back to  ₹22,000 a quintal.