Rising Cumin Prices
Jeera (cumin) prices have surged in recent weeks, driven by robust domestic and export demand alongside tight global supplies. Analysts attribute the price increase to both fundamental and speculative factors. The futures market saw rates increase by nine percent last week, marking the highest gain within the spices complex. A Research Analyst noted that farmers holding back their stocks in anticipation of better prices have also contributed to the price rise. However, the person warned that expectations of higher production could temper this trend.
Speculative Influences
Another market analyst highlighted the speculative nature of the current market. The analyst explained that after a continuous decline in prices, sellers have adopted a “wait and watch” strategy, aggravated by speculative calls and miscalculations regarding crop production. Moreover, the analyst added that the recent price rise is more speculative than based on firm fundamentals, describing it as a corrective movement following a sharp drop.
Higher Crop Production
Jeera prices have fluctuated significantly due to adverse weather conditions affecting crops in 2021-22 and 2022-23. Production dropped to 0.556 million tonnes and 0.627 million tonnes, respectively. However, this season’s production is expected to be 30 percent higher, reaching 0.85-0.9 million tonnes due to a substantial increase in cultivation areas. The sowing area in Gujarat increased by 104 percent and in Rajasthan by 16 percent. Despite this, jeera exports dropped by 21 percent in the April-February period of the 2023-24 fiscal year, totaling 0.132 million tonnes, mainly due to high prices last year.
Future Market Outlook
While higher crop estimates suggest a potential easing of prices, analysts caution that the current pipeline lacks significant surplus stock. Prices could continue to rise if crop estimates are inaccurate or if sellers continue to withhold stock. They also note that despite traders’ claims of demand from China, there is no substantial evidence to support this.
The cumin market is currently undergoing a challenging period marked by supply shortages and speculative influences. While the expectation of a higher crop yield may offer some relief, the lack of significant surplus stock in the supply chain keeps prices volatile. Exporters are recommended to adopt strategic measures to manage these challenges effectively. By staying informed and flexible, exporters can better position themselves to capitalize on the volatile market of cumin.