Spices, oilseeds, fundamentals support red-hot boom

- Commodity Current: Jayavadan Gandhi

The speculative class has become very active in the commodity sector, which is currently booming in most commodities, including agro, bullion, crude oil and metal. Especially in the agri sector, due to the fundamental support of the spot market in spices and oilseeds, the speculators are getting ample ground to support the big boom before the season. With less cultivation of spices like cumin, fennel, coriander, turmeric as well as production due to Mavthas, prices have gone up by an average of 20 to 5 per cent. In the futures market, the level of cumin is 21,000 per quintal and in the turmeric-coriander market, the level has risen to 10,000. The spot market for cumin has fallen due to weak domestic prices. In addition to poor quality of new cumin, production is projected to decline by 20 to 5 per cent, leading to a sharp rise in the price of cumin in the Unjha market. With this, discussions are going on about the futures going up to 200 as the speculative class is getting stronger. Cumin earnings are expected to pick up from next March, depending on how local and foreign households fare. At present, 10 to 15 thousand sacks of cumin stockists are under pressure to sell at a daily profit. However the general merchant class is in a position of overall weight and watch by trading goods as per requirement. Parallel to cumin, the prices of other spices like chilli, turmeric, cloves and ajmo have doubled. Turmeric prices have risen by five per cent in the new year. In the turmeric producing regions, the turmeric market is heating up due to the loss of new crop due to heavy losses due to Mavthas. Due to which turmeric futures jumped to the level of ten thousand in the last few days. However, futures have stopped growing due to increasing selling pressure. Prices of Kashmiri chilli in the range of Rs 500 to Rs 700 have gone up from Rs 500 to Rs 700, dried chilli in the range of Rs 500 to Rs 500, coriander in the market from Rs 400 to Rs 400-500 and clove market in the range of Rs 400 to Rs 1,000. Although farmers are getting good prices for their produce after the boom before the season, there is a wait-and-see situation in terms of selling by the farming community in anticipation of higher prices.

On the other hand, the government has turned a blind eye to the significant rise in prices of edible oils. The stock limit of oilseeds and edible oils has been extended till June 30. State governments have been appealed to take strict action against black marketing and hoarding. The stock limit of edible oil traders has been increased to 20 quintals. The rise in foreign futures markets for oilseeds like Chicago and Malaysia has also affected domestic markets. As a precautionary measure, the government has taken steps to control prices by increasing the limits of the stock limit law. Due to high incentive prices of most oilseeds including rye, castor, mustard, groundnut, sesame, soybean, planting and production are increasing significantly due to government incentive policies for oilseeds becoming self-sufficient as well as higher prices. Especially after many years of Rayda, seeing the high prices, the farmers have started cultivating with Rayada in mind. Across the country, the planting of rye has increased from 3 lakh hectares to over 31 lakh hectares, with the government raising the support price of rye by Rs 200 to Rs 4,050 per quintal. However, due to the current demand, farmers are in a position to get even higher prices than the support prices.

The government has breathed a sigh of relief as the cultivation of spices, oilseeds as well as pulses has increased by an additional 1.5 million hectares. With success in increasing production of cereals, oils and pulses, the government has begun efforts to meet its buffer stock target. The government has already started an exercise to procure oilseeds and pulses along with the procurement of grains from Punjab and Haryana. Due to weak wholesale and retail prices of pulses, prices of all pulses are declining. Due to poor domestic production of guar and guar gum, the market for guar gum has retreated in the range of 11500 to 11200 and the guar seed market is limited in the range of 200 to 300. However, the demand for guar gum is expected to increase in the near future as the crude oil market continues to rise. Guar is mainly exported to countries like USA, Germany, Russia, China, UK, Japan, Australia, Netherlands. With less guar planted this year, production is expected to be around 20 to 5 lakh sacks, with the possibility of a rise in guar and gum being debated in the business community.