Investors long on spices like jeera, turmeric, chilly, and pepper may continue to hold on to their positions with prices rising in the futures market following floods in Andhra Pradesh and Karnataka.
On Thursday, the turmeric October contract on the NCDEX closed 1.35%, up Rs 7,884 per quintal, while chilli closed 1.6% higher at Rs 5460 per quintal.
Ali Muhammad Lakdawala of the brokerage Anand Rathi Commodities said: “Turmeric looks bullish as stocks are low and new arrivals will start next year.” Dungarchand Kanungo, a trader from Duggirala in Andhra Pradesh, feels that low arrivals and depleted stocks will push up the price.
Turmeric prices have more than doubled from Rs 3,500 per quintal levels in January, causing NCDEX to impose special margin on long positions. High prices have also led to an increase in acreage of the crop and production is expected to be over 55 lakh bags in 2010, against 35-40 lakh bags this year.
But Ajeet Kumar of SMC Global Securities feels that turmeric will trade in a range of Rs 7,800-8,000 in the short term. “Since the commodity is overbought, prices may fall by up to Rs 1,000 a quintal in the medium to long term,” he said.
Prices of chilly have been under pressure for sometime. According to Ashok Dattani, a trader, a low Chinese crop and export demand from Malaysia, Indonesia and Bangladesh pushed up prices by Re 1 to Rs 1.50 at the Guntur Mandi in Andhra Pradesh.
Prices of the premium variety rose Rs 5 a kg in Karnanaka to Rs 85-90 per kg after the floods in Raichur and Bellary districts. Chilli production is expected to fall 10-20% at 270-280 lakh bags of 40 kg each against 300 lakh bags last year.
Among other spices, jeera is likely to move up in the medium term on back of good export demand and a bad crop in Syria and Turkey. Indian Jeera is also quoting a low price in international markets. Even pepper is expected to remain firm due to low stocks in main producing countries like India, Vietnam and Indonesia and slow arrivals from Brazil
Source: The Economic Times