Pepper, Turmeric, Jeera, Chilli And Cardamom Analysis: April 25, 2012

Pepper had a minor recovery yesterday after a short covering session but gave positive closing. This short covering is likely to continue.  Prevailing tight supply situation at domestic front due to declined production is likely to support recovery in prices. Limited supplies coming from Vietnam is also keeping global pepper trend in firm note.

70-80% harvesting has been completed in Vietnam, farmers and dealers in Vietnam are holding back their produce which is driving global pepper prices on higher side

According to Karvy Research, prices and volumes have increased while open interest has increased. This indicates that participation has increased on buying side but traders are not holing their positions which might result in volatility in prices

One commodity known for its volatility is Turmeric and it has again proved pundits right. Today it is likely to trade slightly positive on continued short covering during early trading hours

In yesterday’s session, slack buying interest in traders further added to the down side. However, later on prices reversed the trend on short covering at lower levels and futures prices ended the day on higher note.

In case of Jeera, recovery is on its way on lower level buying on back of declining arrivals at spot front. Reports of improved buying from exporters’ side, along with the reports of steady production estimates for Syria and Turkey might support the prices to move up in near term. Production in current season is estimated around 40-45 lakh bags against 28-30 lakh bags last year

Chilli June futures prices are projected to witness further down trend on back of prevailing weak spot market activity. Spot market of Guntur will be closed for one month in May amid peak summer month

According to traders, 3rd round of chilli harvesting has already begun in Karnataka and fresh arrivals have gained momentum in local mandies. 

Chilli June Futures prices continued the fall in prices amid fresh selling on higher levels on Tuesday. From opening of the session futures started trading down on back of lackluster demand prevailing at spot front.

Cardamom prices are expected to continue the correction during the day on back of exporter resistance in bulk buying. High volatility is expected in Futures market. Selling side participation is likely to witness higher volume.

Sugar to depend heavily on planting figures

Sugar May NCDEX Futures Rs./qtl support:2845-2855 resistance:2885-2895.

In the long term, according to Angel Commodities, price trend would depend on planting figures of 2012-13 crop and decision with respect to further exports. Also, it is necessary to keep close watch on Brazilian Sugar harvest.

Sugar prices are expected to remain firm in the intraday on improved demand ahead of summer season coupled with expectations of further exports.

Expectation that government might allow further 1 million tonnes of sugar amidst ample supplies led prices of Sugar in the Spot mandis to remain steady and settled 0.16% lower on Tuesday. However, Sugar futures traded rangebound and settled 0.31% higher yesterday. 

Potato may show some downward revision

In NCDEX, Potato May Futures Rs/qtl support is 955-966 while resistance is at 1000-1010. In case of MCX the support is1045-1054 and resistance 1077-1090

Potato prices may trade downwards in the intraday due to comfortable supplies in the domestic markets may cap sharp gains on the other had demand in the domestic markets may support prices at lower levels.

In the medium term, Potato prices may take cues from the final estimates from the horticulture department which may show some downward revision in the output owing to reports of late blight disease.

Yesterday there was some correction in the initial part of the day but covered towards the end of the day supported by demand at lower levels. Potato Spot as well as Futures settled 0.24% and 1.04% lower.

At NCDEX, a minimum initial margin of 10% of the value of the contract or VaR based margin whichever is higher will be imposed on all running contracts and yet to be launched contracts of Potato with effect from beginning of trading day Thursday, April 12, 2012. 

However, markets are expecting further decline in output due to late blight disease by 20%. The output in UP and West Bengal, the two biggest potato growing states is expected to be lower at 12.8 mn tn (13.6 mn tn in 2011) and 10-15% (13.3 mn tn in 2011) respectively.