India Cumin Prices May Surge To Record Level On Tight Balance Sheet

MUMBAI (Commoditiescontrol) - Spot cumin seed recorded strong rise of over 24 percent in the first couple month of cumin season that begins from March 1, 2016, however it started to react from May month onward pressured by profit booking and slow demand at the higher level. It receded by over 8 percent so far this month.

The strong surge in prices were mainly attributed to lower crop this season due to adverse weather condition and scanty rainfall second consecutive year in the country leading to tight supply-demand balance sheet.

Cumin acreage in Gujarat was 2.95 lakh hectares, while acreage in Rajasthan estimated at 3.5 lakh hectares.

According to trade experts country's cumin seed output likely to fall at 45 lakh bags (55kg each) this season, while opening stocks was projected at 5-7 lakh bags, which takes the total availability at 50-52 lakh bags. Jeera production in 2015-16 was estimated between 55-60 lakh bags.

India's domestic cumin seed consumption is expected in the range of 30-35 lakh bags, while exports was pegged at 20 lakh bags. The total consumption now sum up at 50-55 lakh bags.

The supply-demand equation is in favor of bulls, which they had guessed well in advance resulted bullish trend in cumin during peak arrivals period (March-April).

Pankaj Thakkar, Director, VP & Sons said to commoditiescontrol "Pipeline was almost empty in overseas market as they had sourced lesser around 15 lakh bags (approx. 80,000 tonnes) of cumin seed in financial year 2015-16, which ended March 31, 2016.

Devaluation of currencies in the buying countries and appreciation of Indian currency combined with high prices have led to a steep decline in cumin exports in 2015-16. At 1.55 lakh tonne, valued at Rs 1,800 crore, cumin was the second biggest exported spice from India after chilli in the previous year.

India's export prospects are better this year as production is lower in Turkey and Syria, competitors to India in cumin exports. Syria is suffering from unrest, while crop is lower in Iran, said Thakkar.

"Under such circumstances India's cumin shipment in the global market likely to rise. India cumin is available in the range of $2,500-2,600 per tonne in FOB (free on board)," Thakkar noted.

Coming to arrivals the country as on May 26 of the current calendar year recorded 106,427 tonnes, down 26 percent from same period a year ago, Agmarknet data showed.

Gujarat market received around 71,000 tonnes, down 30 percent versus last year, whereas supplies were down by 16 percent at 31,593 tonnes.

"Export demand is weak during the last few weeks due to higher rates, but still the country is likely to shipped around 45,000 tonnes during cumin marketing year, which starts from March 1, 2016. The shipment is up from 15,000 tonnes (estimates) same period a year ago." said Thakkar.

Conclusion: Cumin seed may trade in narrow range in the near term, but tight balance sheet owing to better exports demand likely to keep prices elevated in the long term. According to trade sources if India is able to ship more cumin than last year, prices are likely to break the record level of 18,530 (first month continuous) set in May 2015.

TECHNICAL OUTLOOK
Jeera Monthly C1 Chart View for Long Term

The long term structure shows wave ii of Wave 2 of Wave C. Wave ii is for correction and retracement of the rise from 13010 to 17800 between the period Feb’16 to May’16.

Retracement levels are placed at 15933-15447-14819. Correction to these retracement levels may happen before moving above 17800 in due course of time. Correction and consolidation may be witnessed between17800 and 14819 in time to come.
Resistance will be at 17500-18930.

Whenever breakout and close above 18930 happen a massive rally for Wave 3 structure will be confirmed.

For short to medium term correction and sideways consolidation may happen at lower retracement levels. If at all whenever breakout above 18930 happens in time to come the target implication can be 22200 or above.

For near term to short term resistance of 17500-18930 will be key for upside breakout.

Strategy: For Long term physical trader’s accumulation to the retracement level of 15933-15447-14819 is the strategy. For traders can trade long only on breakout and close above 17800.

(By Commoditiescontrol Bureau; +91-22-40015533)