Lower production worries push up Coriander prices
Disappointed with the low prices last year, growers have increasingly shifted to other crops like mustard and chana, which are fetching better prices.
By P K Krishnakumar, ET Bureau |
KOCHI: Coriander prices have been rising on concerns of a lower production next year. A bumper crop of about 4 lakh tonne had dragged down the prices last season forcing farmers to shift to other remunerative crops. Good weather and a healthy carryover stock may, however, cap gains, say analysts.
Sowing started last month in the chief producing areas of Rajasthan, Gujarat and Madhya Pradesh. Disappointed with the low prices last year, growers have increasingly shifted to other crops like mustard and chana, which are fetching better prices. As a result, there has been a reduction in the sowing area.
India is the largest producer of the spice, accounting for nearly 80% of global output. In anticipation of a decline in production, speculative buying has pushed up futures prices.
Two days ago, the December and January contracts hit the upper circuit surpassing Rs 50 per kg on the National Commodity and Derivatives Exchange. The January contract hovered around Rs 52 while the April contract ruled at Rs 58 per kg on Wednesday.
"Prices may flare up only if the fall in sowing area is more than 25%. The sowing season could extend till January particularly in Rajasthan, the main producer. So a clear picture may emerge only by then," said PCK Maheswaran, partner of PCK Kannan & Co, a leading exporter of the spice.
Total production, which used to range between 3 lakh tonne and 3.5 lakh tonne, jumped to 4 lakh tonne last year pushing the average price to Rs 30 to 35 per kg. Spot price has risen to Rs 50 per kg now. "Good carryover stock from the previous year will check the prices in the current season. Also one has to keep a close watch on weather, which, if favourable, will boost production," said Vedika Narvekar, senior research analyst of Angel Commodity Broking.
Exports comprise 5-10% of total production while the rest is mopped up by the domestic market. Last year, high prices affected exports which fell 30% to 28,100 tonne. "This year, it should be in the range of 32,000 and 35,000 tonne," said P C K Maheswaran.
Sowing started last month in the chief producing areas of Rajasthan, Gujarat and Madhya Pradesh. Disappointed with the low prices last year, growers have increasingly shifted to other crops like mustard and chana, which are fetching better prices. As a result, there has been a reduction in the sowing area.
India is the largest producer of the spice, accounting for nearly 80% of global output. In anticipation of a decline in production, speculative buying has pushed up futures prices.
Two days ago, the December and January contracts hit the upper circuit surpassing Rs 50 per kg on the National Commodity and Derivatives Exchange. The January contract hovered around Rs 52 while the April contract ruled at Rs 58 per kg on Wednesday.
"Prices may flare up only if the fall in sowing area is more than 25%. The sowing season could extend till January particularly in Rajasthan, the main producer. So a clear picture may emerge only by then," said PCK Maheswaran, partner of PCK Kannan & Co, a leading exporter of the spice.
Total production, which used to range between 3 lakh tonne and 3.5 lakh tonne, jumped to 4 lakh tonne last year pushing the average price to Rs 30 to 35 per kg. Spot price has risen to Rs 50 per kg now. "Good carryover stock from the previous year will check the prices in the current season. Also one has to keep a close watch on weather, which, if favourable, will boost production," said Vedika Narvekar, senior research analyst of Angel Commodity Broking.
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Exports comprise 5-10% of total production while the rest is mopped up by the domestic market. Last year, high prices affected exports which fell 30% to 28,100 tonne. "This year, it should be in the range of 32,000 and 35,000 tonne," said P C K Maheswaran.
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