Spices futures could extend decline

MUMBAI: Lower export demand and rising arrivals are expected to add to the ongoing correction in spices futures on NCDEX (National Commodity and Derivatives Exchange). Active month contract of commodities like turmeric, pepper and jeera have experienced an average decline of 4-5 per cent in last five sessions.

According to Mehul Agarwal, research analyst at Sharekhan Commodities, ���Subdued international demand, especially in the case of pepper, seems to have triggered the correction in prices while arrivals have been regular.���

Pepper exports declined 27 per cent in the period April 2008 to June 2009. Exports stood at 21,600 tonnes during this period compared to 29,700 tonnes in the same period last year.

Besides lower export demand, exports from Vietnam are also putting some pressure on prices. ���Since harvesting in Vietnam has commenced and crop from the country is quoted cheaper to that from India, domestic prices are expected to be affected by Vietnam crop size of nearly 1,00,000 tonnes this year,��� said Alimohmmed Lakdawala, research analyst, Anand Rathi Commodities.

Turmeric prices have declined due to a daily average arrival of 20,000 (75 kg each) bags in the key spot markets of Erode and Nizamabad. ���However, the pace of arrival is still not very acute considering Feb-March is peak arrival season. Also, farmers have been advised to hold back their stock till June by advisory bodies like Tamil Nadu University in order to gain from an expected rise in export demand,��� added Alimohmmed.

Jeera, however, is expected to perform well in the coming months as arrivals from countries like Syria and Turkey will not begin before July while these countries have seen lower carry over stock for the year. ���While India���s production has always been more than these two countries, a rise in export demand while harvesting in these countries is to start in June can support prices on lower levels,��� said Mehul.

NCDEX futures, in this backdrop, could extend the decline in coming weeks while supports is expected at Rs 10,200 per quintal for jeera May contract. April futures of pepper and turmeric are expected to find support near Rs 11,400 and Rs 4,400 per quintal respectively.