Spices Remain Bullish - Jeera, Dhaniya Appear Stronger than Turmeric

Spices had appreciated significantly in the first week of April and new highs were observed in Jeera as well as Dhaniya. The tight supply and steady demand situation supported the futures prices, especially in the case of Jeera and Dhaniya. For the same time, period turmeric was supported by fresh buying interest amongst stockists since prices had turned quite cheaper during the later days of March. As the new season arrival pace improved after the first week, the commodity had given back the gains.

Jeera at NCDEX had established a high of 23495 during the previous week before undergoing a 1000-point correction. Fresh buying interest emerged after the correction, and the futures were successful in making a decent recovery. According to the second advance estimate by Gujarat state agriculture department, jeera production is seen declining to 236980 tons in 2021-22, down 41 percent year on year. India’s export prospects have improved for this year as the supplies are limited in Turkey and Syria, which compete with India in the exports market.

Turmeric prices have jumped to a 7-week high, last to last week. Presently the prices are nearly 15 percent higher when compared to last year. As per the Government’s first advance estimate, the production for the 2021/22 season is pegged at 11.76 lakh tonnes in 2021-22 against 11.24 lt in 2020-21. The data also conveys that turmeric exports in Jan 2022 are down by 25% month-on-month at 10,600 tonnes versus 14275 tonnes in December 2021. Exports in the month of February 2022 were 10400, lower by 17% versus last February month’s exports of 12,575 tonnes, For FY 2021/22 (Apr-Feb), exports had fallen by 20% at 1.37 lakh tons compared to last year. However, the numbers are still above the 5-year average by 8.3%.

Dhaniya futures (May) slipped after making a new high of 13298 in the first week of April. There has been a moderate recovery during the recently ended week. Prices have doubled year on year, and up 39.8% since January 2022.

Steady exports and lower crop estimates have supported the markets. Coriander or Dhaniya exports in Feb 2022 are up 5.5% y/y at 3320 tonnes compared to 3150 tonnes last year as per the Government release. For FY 2021/22 (Apr-Feb) the exports are lower by 13.7% at 44,450 tonnes versus 51.5 thousand tonnes last year. The numbers are however 11% higher when compared with the 5-year average.

Price Outlook:

The Ramadan season demand will be supportive for the spices market in the forthcoming weeks. The export outlook of these spices appears positive for the coming months, and the peak supply period is getting over for Jeera and Dhaniya. For turmeric, the arrival pace from the South will decrease now, but the numbers shall increase from Maharashtra, and will continue for the next 2-3 months at least. Therefore turmeric arrivals shall continue at a decent pace till July. All in all, the price trend remains up for spices but gains in Dhaniya and Jeera will be more prominent than turmeric, going forward. However, rising prices are prompting the buyers to wait for further price discounts. The supply pace is still higher in all the spices which is another factor in buyers waiting for better offers. Therefore prices may be under pressure in the short run and start appreciating after a few weeks.

Near Term Technical Overview of Turmeric, Jeera & Dhaniya

Jeera: The benchmark contract has been making new highs month on month and we get bullish signals from the directional indicators. Prices have bounced back this month after establishing the high 23240, but buyers were stepping at every dip. May Jeera is comfortably placed above the upper Bollinger band region, thus making the scenario strongly bullish.

But the short term has turned slightly bearish therefore we expect the upward trend to be capped for the next few weeks at least. For the remaining part of April, we expect May Jeera to touch 23200 if it holds above 22500 on a closing basis. However, in case of closing below 21700, there can be a downward move towards 21150-21200.

Turmeric: The May contract is facing resistance in holding above the 9850-9950 mark for the past few weeks. As indicated by the monthly indicators, the medium-term indicators are slightly weak, yet the broader view remains bullish. Currently, the contract trades near the 9280 level. As long as it closes below this value, the tendency to move lower towards 8650/8300 will be high. On the other hand, strong resistance for the month of April will be 9800-9850.

Dhaniya: The May contract had slipped after making a new high of 13298 in the first week of April and there had been some pullbacks thereafter. Like Jeera the broader view is bullish and moving forward we expect new highs in this counter as well. The May contract for the next few days shall trade with a positive bias with a strong support region lying 12000-12080. As long as prices are closing above 12000, the contract can re-test the 12940-13000 resistances. In case this level is breached comfortably, the next resistance will be 13550.