Furthermore, Jeera exports from India are also expected to pick up in the United States during the coming weeks.
Cumin Seed, commonly known as 'Jeera' in India, is a Rabi Spice sown/grown in the winter season during the months of October to December. The major states constitute Rajasthan and Gujarat, with the usual new crop harvesting period taking place from February to April every year.
Sowing of Jeera depends on the winter weather conditions during the said period. Cooler temperatures with good amounts of water content in the soil improves the yield for sowing and eventually increases the production during the harvest period. Price also plays a critical role that would determine how much sowing the farmers are ready to do in the above period.
Higher prices are generally forecasted to increase sowing of Jeera while lower prices can possibly lead to crop switching to other crops such as Mustard, Ginger, Coriander Seed and Chana in the earlier mentioned states respectively. There is various quality of Jeera sold in Indian market mainly NCDEX quality, Gold, Bold, Super Bold and Average. Prices differ with different quality based on the fertilizer content, organic nutrients and moisture content in the Jeera.
Europe and the United States prefer Bold and Super bold quality, which are one of the premium qualities of Jeera with higher medicinal and organic value. Other global market buyers of Jeera are China, Middle East Countries and Egypt. Turkey and Syria are two other countries that also produce cumin seed every year. India contributes 70 percent of the total Jeera production in the world, while Syria and Turkey contribute 20 percent and 10 percent of the total world production of cumin seed respectively.
NCDEX Jeera spot price has been trading mixed to bullish during the month of July so far closing at Rs 14,050 per quintal by July 21. It is higher by 1.43 percent compared to Rs 13,852 per quintal reported on July 1. Revival in export buying in the global markets, especially from China after the earlier border disputes with India has supported the prices.
Consignments to China were earlier kept on hold due to border disputes with India, but then later, the shipments have been processed after there has been some easing tensions between both these nations. On the other hand, NCDEX Jeera August Futures closed at Rs 14,410 per quintal on July 21, higher by 5.29 percent compared to Rs 13,685 per quintal reported on July 1.
Fundamentally, for the month ahead, NCDEX Jeera futures is estimated to remain bullish due to reviving export demand in the international markets. Along with China, UAE and Vietnam has also witnessed an incline in demand for Indian Jeera.
Moreover, export buying from the European Nations for Indian cumin seed is also expected to pick up, as the production in Syria has been reported to be lower by 25-30 percent in this year compared to the previous year amid the worldwide lockdown situation. Furthermore, Jeera exports from India are also expected to pick up in the United States during the coming weeks.
However, extreme bullishness in NCDEX Jeera prices can be capped as cumin production in India from last year (2019-20) has been reported to be higher by 33 percent to 100 lakh bags (1 bag=60kgs), from 75 lakh bags reported in the previous year 2018-19. This has eventually led to higher carry forward stocks of approximately 12-15 lakh bags this year 2020-21, compared to 6-8 lakh bags of the year 2019-20.
Traders sources are also forecasting that this year 2020-21, Jeera sowing acreage to decline by 20-25 percent in Gujarat and Rajasthan states, as the spot and future prices are currently trading at the lowest levels in the last 5 years. We are likely to see crops switch to other crops such as Coriander Seed, Chana, Ginger and Mustard Seed in the above states. Currently, there is still time for sowing to begin as Jeera being the rabi spice, is expected to witness sowing by the first week of November month onwards till the end of the year.
Overall, we expect a bullish trend on NCDEX Jeera August Futures and prices are expected to move up to Rs 15,200 per quintal for the month ahead.
The author is Executive Director at Choice Broking.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.