Jeera bullish on lower production, higher exports: Angel Broking

Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):

"In the first quarter of 2017, the jeera futures were under pressure for most of the period. On National Commodity and Derivative Exchange (NCDEX), the prices have touched highest levels of Rs. 19,230 per quintal in second half of Jan 2017 and slipped to Rs.16,690 within two months in mid March. This drop of 13.2% NCDEX was due to expected supply pressure in March and April, as maximum arrivals hit the market from the major growing regions in Gujarat and Rajasthan.

However, the Jeera futures prices have jumped by 12.8% to Rs. 18,650 from the lower levels in mid-March (in less than a month) on NCDEX. It hit the upper circuit twice within a fortnight and recovers most of losses incurred during the first quarter of 2017 amid lower production outlook and forecasts for good exports demand.

The production estimates for 2016/17 is lower due to decline in acreage in Gujarat. As per second advance estimates for 2016/17, production of Jeera in Gujarat will be 2.21 lakh tonnes (lt), down almost 11% compared to last year production of 2.38 lt.

The export of jeera in 2016/17 is expected to be higher than the previous year. As per the data released by Department of commerce, GOI, jeera the exports increase by 32% to 1,01,188 tonnes during first ten month of the financial year 2016/17 (April-January). Last year, India exported about 76,663 tonnes during the same period.

Recently, due to high volatility, the National Commodity and Derivatives Exchange (NCDEX) has impose a 5% additional margin on all running as well as yet-to-be-launched futures contracts of jeera on both buy and sell positions. The month of March is the highest arrival month for the jeera while the months of April and May the arrivals will be comparatively less and gradually diminishing.

The jeera prices have been on the higher side this season compared to last two years during the peak arrival season - March and April which is expected to get firm in coming month as the stock levels in the country is expected to lower on reports of lower production estimates and good exports demand.

Going forward, the movement of jeera will depend mainly on domestic consumption demand, forecast of monsoon and export demand throughout season. Jeera supplies from Syria and Turkey is expected to be lower this year due to unrest and geopolitical reasons which gave a boost from exports from India. The new crop in Syria and Turkey is harvested in Aug-Sep and till then Indian jeera will find a good market overseas.

We expect that Jeera prices for May delivery may trade higher from the current levels (CMP: Rs. 19,030) to touch Rs. 20,000 /20,500 per quintal in the coming months. However, the price may consolidate near 19,500 levels if the export demand remains subdued because of higher prices in domestic market."

Source : Equity Bulls

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