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HIGHLIGHTS

Jeera gained over 11% this month amid fears of a deficient monsoon and as a geo-political crisis in Afghanistan could turn the heat as supply of spices has been halted suddenly.

Support also seen due to high export demand and expectation of fall production in 2020-21 crop year and lower carry-over stocks amid steady to firm domestic and export demand

With lower customs duty on products from Afghanistan and long-term supply arrangements in place, traders have refrained from reaching out to alternate destinations, but fear domestic prices might soar.

Gujarat, has reported 59 per cent deficient rainfall till August 24. The key growing region of North Gujarat has 62 per cent rainfall deficiency.

Similarly, major jeera growing districts, including Jaisalmer and Barmer, face a rainfall deficit, triggering drought-like situation in western Rajasthan.

Gujarat is the largest producer of cumin, where production stood at 4.29 lakh tonnes during 2020-21, while in Rajasthan, the output of the spice seed crop was estimated at 4.25 lakh tonnes.

There is also uncertainty of the lockdown over a possible third wave of Covid and low demand from the hotel industry.

Estimated Jeera production for the crop year 2020-21 to fall by around 11% on account of decline in sown area and lower yield due to adverse weather prevailed in key growing states Gujarat and Rajasthan.

As per the second advance estimates released by the Ministry of Agriculture, Govt. of Gujarat, Jeera production is likely to remain around 3.7 lakh tonnes in the crop year 2020-21 despite fall in sowings due to better yield.

On the international front support is also seen as Turkey and Syria have reported less production of cumin this season. Production in Syria had dropped around 25-30 percent versus the previous year due to political instability that has hampered the farming sector.

The export of cumin seeds of Turkey and Syria was visible in the international market in July-August every year, due to which the export of Indian cumin used to decrease after July-August, but not in the current year of cumin of these two countries. Exports cannot be done due to poor crop conditions. On the contrary, importers from Syria and Turkey are currently buying cumin seeds from India.

Last year, due to good crops of cumin in Afghanistan and Iran, the supply of these two countries was visible in the international market. Due to this, the export of Indian cumin was reduced after July-August, but this year the crop has been very less in both these countries.

The export of cumin is increasing continuously and in the coming days, the export of cumin is showing signs of increasing in a big way. However, the freight of container-vessels has increased and the shortage of containers is increasing continuously. Despite this, till now exports are being done by export at FOB price and in some cases the freight of both side containers is being settled.

Due to the forecast of drought in Gujarat-Rajasthan by Skymet, the speculative elements have come in the mood to increase heavily in cumin futures. Gujarat and Rajasthan being the only two states producing cumin in the country, the most impact of the forecast of Skymet is visible on the market of cumin.

Technical Chart :

Outlook:

In our last report, we have mentioned fundamentals will soon turn bullish and with the technical support, we were expecting prices to bounce towards 14600 levels while to our surprise market spick towards 16000 levels. Under technical analysis the best method to identify a classic “price action reversal” is for a weekly candle to close, such as a bearish pin bar or a Doji formation, the same we have seen in Jeera weekly chart which alerts that prices can suffer a deeper pullback in the next week/month if prices sustain below 15100 levels, validating the bearish pin bar candle created this week. Essentially, Jeera created a bearish pin bar, which indicates the week began with optimism but ended on a pessimistic note. As a result, that candlestick is widely considered an early sign of bullish-to-bearish trend change. The bearish reversal would be confirmed as prices close this week below the 15000 levels. That could yield a deeper drop to the psychological support 14200 and below see support at 13800 levels in a few weeks. Noting that breaching the 15240 levels (50% of Fibo level) will extend the bullish sentiments again to reach 15840 and above the same can test the 16900 levels

So as long as prices are below 15240 we can see weakness in prices towards 14200-13800 level. Only above 15240 prices rally will start so we suggest selling jeera towards 14700-14800 level with stop loss above 15240 for support at 14200 & 13800 levels.

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