Spices turn hot on global demand, crop failure fears

AHMEDABAD: Spices like chilli, pepper, jeera and turmeric have become very hot on the National Commodity & Derivatives Exchange (NCDEX) recently. Speculation as well as hedging by traders due to certain global events and the rains in India have added spice to these commodity counters during the last few weeks.

The daily traded value of chilli has shot up from about Rs 25 crore to Rs 180 crore in the last few days. In case of pepper, the daily value has jumped up 10 times from Rs 10 crore to about Rs 100 crore in one month’s time.

Turmeric’s daily trades have gone up from a couple of crore to Rs 15-20 crore per day. Jeera trades have shot up from under Rs 30 crore daily to a high of over Rs 200 crore recently and currently it is around Rs 60-80 crore.

“Excess rains in certain areas of Andhra Pradesh where chilli is grown has led to fears of a poor quality crop. Increased buying

from Bangladesh and Sri Lanka have led to a spurt in export demands and with China’s chilli crop getting damaged by floods, a further rise in exports demands is possible,” says G Srivastava, president, commodities research firm Foretell Business Solutions.

Futures price of chilli has risen from Rs 4,900 to around Rs 5,200 during the last few days. Such large daily trading volumes of Rs 180 crore in chilli are the highest in the last several months.

The futures price of pepper has risen from Rs 8,000 to over Rs 10,000 in the past one month on the NCDEX after touching a high of 11,016 on July 31. “A poor pepper crop in Vietnam as well as Brazil and Indonesia’s production yet to enter the global markets, led to a spurt in prices for India’s pepper,” says Biren Vakil, head of commodities research firm Paradyme Commodity Advisors.

Jeera prices shot up from Rs 7,000 to Rs 8000 in the past one month as supplies from the second largest producer of jeera, IL&FS Investsmart’s commodity head Sunil Ramrakhiani told ET that a shortfall in production from Syria and Turkey led to higher exports from India.

India is the world’s largest jeera producer and accounts for around 1.2 lakh tonnes per annum out of the global production of about 2 lakh tonnes per annum according to Mr Srivastava.

Devendra Patel, an Unjha-based jeera trader said that with the ceasefire in Lebanon, the supplies from Syria will now come in and lead to a slow-down in jeera future prices. “Good rains in Gujarat and some other states would lead to expectations of a better crop and further pull down futures prices,” says Mr Patel.