Jeera down on reports of higher production prospects: Angel Commodities Broking

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

"Jeera futures touched its 20 months lows yesterday on expectations that the production during the coming harvesting season will be higher by at least 25-30% higher than the last year. The most active March delivery contract on National Commodities and derivative Exchange (NCDEX) touched Rs. 15,810 per quintal last seen during Jun 2016.

The new season jeera futures contract was trading near 18,000 levels during the start of the year but now slipped by more than 11% or Rs. 2000 as arrivals of new season jeera hit the physical market rather early this season. A per Agmarknet data, arrivals of jeera have been about 7,000 tonnes in the country during first half of February compared to 6,000 tonnes last year for the same period.

Gujarat is the largest cumin sowing state followed by Rajasthan. In Gujarat, acreage was higher this rabi as farmers prefer jeera crop over wheat, coriander and pulses as prices record prices during last two year. As per latest report by Department of Agriculture Gujarat, cumin acreage in the state was about 3.827 lakh ha against 2.787 lakh ha sown during same period last year. The normal area for the season is 2.8 lakh ha.

However, stocks of Jeera in the NCDEX warehouse were about 10,000 tonnes during the first week of February, highest during this time of the year (off season). During last three months (Nov - Jan) of old season Exchange has delivered about 10,400 tonnes which is all time high.

Moreover, as per data published daily by NCDEX, the short position of the top 10 trading clients steadily increased from 2,275 lots to currently 2,784 lots in a months' time, that is, an increase of 22% while long positions for top ten clients down by 30% to 1,457 lots from 2,079 lots during the same period.

Despite higher prices in the domestic market, Jeera exports during first 8 month of FY 2017/18 (Apr-Nov), according to Directorate General of Commercial Intelligence and Statistics (DGCI&S), Kolkata was 98,681 tonnes, up 15% compared to last year exports for the same period. India had exported 94,000 tn of jeera both seed and crushed form in Apr-Dec 2016, according to data compile by DGCI&S, Kolkata. It is expected that the jeera exports will be about 10-15% higher than the last year exports of 1.25 lakh tonnes.

Jeera futures for March delivery may trade under pressure in coming weeks looking at higher warehouse stocks increase in arrivals coupled with higher net short positions hold by the market participants. However, there is a good buying opportunity for the market players such as exporters and traders to increase their buying at lower prices as the exports from the country will be higher during the month of March - May. During the last two seasons, the prices start to increase during the peak arrival months before it correct during the monsoon months."

Source : Equity Bulls

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