A comprehensive update

on

Sp ces

9 June 2010

Pepper

International Pepper Community has lowered 2010 world pepper

output by 9,000 tonnes to 2,70,650 tonnes as compared to 2,79,650

tonnes in 2009

Unfavourable weather condition in Brazil, Indonesia and Vietnam

resulted into drop in output

Vietnam had shipped 80,000 tonnes of pepper in first 5-months of

CY2010 and left with 40,000 tonnes till new crop in 2011

Pepper

India MG-1 ASTA is at $3650 per tonne while Vietnam ASTA is at

$3630 per tonne, Brazil is at $3600 per tonne FOB Belem and

Indonesia is at $3675 per tonne FOB

Now, rates of all the major pepper producing countries is at par in

the international market

India being preferred for quality, there are expectations of good

demand for Indian pepper

Moreover, in the spot market, supplies are remaining limited as

sellers are not in a hurry to sell

World pepper balance sheet

India pepper balance sheet

Source : IPC

Supply (tonnes) Demand (tonnes)

Production 2,79,650 Consumption 3,20,000

Carry forward stocks for 2010 79,124 Carry forward stocks for 2011

72,082

Total 3,58,774 Total 3,92,082

Shortage: 33,308

Supply (tonnes) Demand (tonnes)

Production 40,000 Domestic consumption 45,000

Imports 14,000 Exports 25,000

Ending stocks of 2009 11,350 Carry forward stocks 10,350

Total 65,350 Total 80,350

Shortage: 15,000

Pepper futures are expected to trade on a positive note supported by the

fundamental factors of tight supply amid expectations of good demand.

Recommendation: Pepper NCDEX: Medium term: Buy in the range 13500-14000 targeting 17000 then 18000 with stop loss at 12000

Jeera

For 2010, India’s jeera production is estimated to be higher by 11%

at 1.5 lakh tonnes Y/Y

Syria, Turkey and Iran are the three major Jeera producing countries

besides India in the world

Syria crop is expected to be same as that of last year to around

25,000 tonnes, while Turkey and Iran crops are expected better than

last year to around 15,000 tonnes for each

As a result of good crop in major countries—world jeera production is

likely to be higher by 13% to 2.14 lakh tonnes Y/Y

Syria new crop harvest has started while Turkey and Iran new crop

will come to the market July month onwards

Jeera

Presently, Unjha market—largest market in India—is witnessing a limited

arrivals at around 3,000-4,000 bags (1 bag = 60 kg) against 25,000-35,000 bags

during peak arrival period (Feb-Apr)

Arrivals will start easing from the month of July and this is expected to render

some upside support to prices

Export demand is remaining steady with demand limited to Middle East

countries

In the international market, Indian rate is in the range of $2,460-2,600 per tonne

while Syria rate is $2,200 per tonne and Turkey rate is $2,240-2,460 per tonne

During the monsoon season spot market activity remain subdued with limited

participation among buyers and sellers

Indian jeera balance sheet

* All are trade estimates

With supply pressure continuing from the major competitors Syria,

Turkey and Iran, export demand is expected to remain steady for

Indian jeera as of now

Supply (tonnes) Demand ( tonnes)

Production 2010 1,50,000 Domestic consumption 1,40,000

Imports 0Exports (expected by March

2010)35,000

Carry forward 36,000 Ending stocks 11,000

Total 1,86,000 Total 1,86,000

Balanced

Jeera outlook

Near term : Bearish : Weak export demand amid sustained arrivals ;

and timely and normal monsoon expectations

Long term : Bullish : expectations of export demand by the month of

September - October; crop sowing progress will be an important

factor to watch for

Recommendation: Jeera NCDEX: Buy in the range 11200-11400 targeting 14000 with stop loss below 10000

Turmeric

Turmeric production in 2009 remained around 2.94 lakh tonnes, down by 20%

Y/Y

Production in 2010 is expected to up 30% to 3.85 lakh tonnes

However, carry-forward stocks are nearly 7,000 tonnes in spot market—

resulting to tight supply

Arrivals have gradually come down to 500 bags at Nizamabad market and 5000

bags at Erode market (1 bag = 70 kg)

Spot rate is hovering around Rs.14,500 per quintal at Nizamabad market and

Rs.15,000 per quintal at erode market

Export demand is expected to gain by the month of July-August, which might

render upside support to prices

Turmeric Domestic demand is remaining subdued but market participants are

expecting revival in demand at these lower levels in coming days

Report of normal and timely monsoon is expected to result in increase in

acreage by nearly 30% during this year’s kharif season

Last year acreage was around 1.2 lakh hectares

During monsoon season supplies decrease further, which might support the

rise in prices

Monsoon progress across the major growing areas in coming days will be an

important factor to watch for

If, monsoon remains normal and timely, it might act as a limiting factor for

sharp rise in prices

India’s turmeric balance sheet

* All are trade estimates

Turmeric prices are expected to trade higher in coming days

supported by the factors of gaining demand amid easing arrival

pressure. Export demand is expected to gain in coming days which

is also supportive for rise in prices.

NCDEX has modified the turmeric contract specifications ;

Trading and delivery unit: 5 MT from 10 MT; Tick Size: Rs.2 from

Rs.1. This will be in force from 10th June 2010 for all existing

contracts.

Supply (tonnes) Demand (tonnes)

Production 3,85,000 Domestic consumption 3,20,000

Ending stocks of 2009 7,000 Exports 51,000

Total 3,92,000 Total 4,01,000

Shortage: 9,000

Recommendation: Turmeric NCDEX: Buy in the range 13000-13300 targeting 16000 then 16600 with stop loss at 11700

Chilli

Chilli production for 2010 is expected to be higher by 10% to 13.2

lakh tonnes Y/Y

The crop has been good in Andhra Pradesh, but lower in other major

chilli producing states namely West Bengal and Tamil Nadu

Total number of cold storages in Guntur has increased to 83 this

year. Hence, the storage capacity has increased from 50 lakh bags

last year to nearly 70 lakh bags this year (1 bag = 35 kg)

Despite the increase in number of cold storages, almost all the cold

storages are full to their capacity

The major market at Guntur was closed for one month from 07 May

2010 to 07 June 2010 due to increasing mercury levels

Chilli

Market activity is expected to resume gradually in coming days

Export demand is expected to be good this year

China is one of the major competitor for India and its crop has been

estimated to be lower by 40% this year

India exports mainly to Malaysia, Bangladesh, Srilanka, U.S.A.,U.A.E.

and Pakistan

Lower Chinese crop is expected to help sustain the export demand

for Indian chilli

Balance sheet of India chilli

* All are trade estimates

Monsoon progress across the major growing areas in coming

months can give a fresh direction to prices

Supply (tonnes) Demand (tonnes)

Production 13,20,000 Domestic consumption 11,50,000

Ending stocks of 2009 50,000 Exports 2,00,000

Total 13,70,000 Total 13,50,000

Balance: 20,000

Chilli prices are expected to trade higher in coming days as there

are expectations of good export demand for Indian chilli due to lower

china crop. Arrivals are remaining limited to the physical market as

market participants are expecting rise in prices

Recommendation: Chilli NCDEX: Buy above 5100 targeting 5600 then 6000 with stop loss at 4300 (or) Sell below 4250 targeting 3700 then 3400

with stop loss at 5000

Cardamom

Cardamom production in 2009 was lower by 14% to 9,500 tonnes Y/Y

Production for 2010 is expected to be higher by 15% to 11,000

tonnes

According to market sources, even rise in production in 2010 would

fall short of demand due to drop in output in Guatemala

During 2009, Guatemala crop was lower by nearly 60% to

around7000 tonnes

India is the major supplier of cardamom across the globe as of now

Hence export demand prospects are very good for Indian cardamom

and expected to be sustained till the new crop in 2011

Cardamom

Cardamom fresh arrival season starts from the month of May and continues

till July

This year arrivals are remaining limited in the range of 15,000-17,000 kgs

against the usual arrivals of 25,000-30,000 kgs during the peak season

Active export and domestic demand are the major supporting factors for rise

in prices

MCX has levied 5% special margin in cash applicable in cardamom contracts

effective from 10 June 2010

Thus, special margin on buy side is now 25% and a 5% special margin is also

there on sell side

Balance sheet: Indian cardamom

* All are trade estimates

Export demand will remain the major trigger for cardamom

prices this year

Supply (tonnes) Demand (tonnes)

Production 11,000 Domestic consumption 10,000

Ending stocks of 2009 1,000 Exports 2,000

Total 12,000 Total 12,000

Balanced

Cardamom prices are expected to trade higher in coming days as

there are expectations of good export demand

Recommendation: Cardamom MCX: Buy in the range 1740-1700 levels targeting 2000 then 2100 with stop loss at 1500

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