Spices market on a boil due to crop damage, low arrivals

Spices complex has been on boil since the last four months due to crop damage in growing areas. The crop was damaged mainly due to unseasonal rain. Prices of spices like chilli and coriander increased almost 80 per cent while jeera and pepper prices were up 20 per cent in the last four months. Turmeric on the other hand was down by 27 per cent on National commodities and derivative exchange (NCDEX) in the last four months due to fresh arrivals in the market. However, compared to last year around this time prices of all spices are significantly up.

In November, India exported 43,850 tonnes of spices and in December, it exported a total of 29,910 tonnes, declining 31 per cent. Delay in arrivals of the new crop caused exports to fall in December, but they improved again in January, a Spice Board of India official said.

Chilli

Chilli exporters have resorted to only need based buying as prices are now close to all-time highs, Ashok Dattani, a Mumbai-based chilli trader said.

Chilli arrivals in Andhra Pradesh this season are expected to be at 10 million bags (1 bag weighs 40 kg) compared with 21 million bags which were received last season, Ashok Dattani said.

RAIN PAIN

Average price per quintal

Spice		Mid Feb 2010		Mid Feb 2011		Change (%)
Chilli		4,500		8,000		77
Jeera		10,800		14,200		31
Pepper		13,100		23,100		76
Turmeric		10,300		12,100		17
Coriander		3,300		4,800		45
Cardamom		9,500		11,340		19

Source: Spices Board of India

This year, country’s chilli production is estimated at 19 million bags compared with 37.5 million bags last year.

Apart from quantity, the quality of the crop has also been affected due to unseasonal rain.

In spot markets, chilli prices reached an all-time high of Rs 9,500 (excluding taxes) a quintal last week.

The current prices of chilli of average variety is Rs 8,000 a quintal compared with Rs 4,500 a quintal in the same period last year, according to Spice Board of India.

Jeera
Exporters in the jeera market are staying away as they find jeera prices too high. On NCDEX jeera has moved up 16 per cent from October 1, 2010 till February 17. While on a year-on-year basis, it has gone up 31 per cent to Rs14,200 a quintal.Also, late arrivals in the spot market triggered the rise in jeera prices. Jeera arrivals are expected to start by March 15, and that is when exporters are expected to resurface as prices are expected to drop, said Bhaskar Shah, the ex-president of spices and food exporters association.

This year’s crop is estimated to be at 2.7-2.8 million bags (1 bag weighs 60 kg) compared with last year’s 3 million bags.

“Futures may remain moderate in the short term, but, the underlying current still remains bullish for jeera,” said Faiyaz Hudani, a senior analyst with Kotak Commodity Services.

Pepper
Indian pepper exporters are facing tough competition from Barzil, Vietnam and Indonesia as Indian pepper is quoted at $5,600 a tonne while pepper from these countries are quoted $700 a tonne lower than Indian pepper, Jojan Malayil, a Kochi-based pepper exporter said.

Pepper crop this year is estimated to be around 48,000 tonnes compared with 52,000 tonnes last year.

At the moment, most of the pepper export orders are going to Vietnam, Manish Vora, a Mumbai-based pepper trader said.

Coriander
Coriander futures have also moved up sharply. They rose over 76 per cent on NCDEX since October 1, 2010 due to lower acreage.

The average crop usually stands at 3.1 million tonnes, but this year a 40-50 per cent drop in arrivals is estimated.

On the other hand, turmeric prices have eased and are now steady as arrivals have started to hit the market.

This year the average daily arrivals are around 20,000 to 25,000 bags (1 bag weighs 75 kg).

Turmeric
This year's turmeric crop is estimated to be around 6.5 million bags compared with last year’s 4.8 million bags.

This year prices have not slumped as much as expected due to strong export demand for the commodity.

The current price is Rs 12,100 a quintal compared with Rs Rs 10,300 a quintal last year.

Arrivals are yet to start at Warangal, Salem, Cuddapah and Duggrila spot markets, Manubhai Shah, a turmeric exporter said.

Narayan, the export manager with Jhaveri Industries, which owns leading spices brand Badshah Masala and a major player, said their exports have not been affected, rather have increased by 15-20 per cent compared with the previous year, and export inquiries are still pouring in.

(Source: http://www.business-standard.com/india/news/spices-market-onboil-due-to-crop-damage-low-arrivals/425551/)