Indiabulls Commodities Limited

SHORT TERM REPORT ON JEERA (CUMIN SEED)

27-Oct-09

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Jeera (Cumin) Fundamentals

Cuminseed (Jeera) is a native of the Levant and Upper Egypt. Now it is grown mainly in hot countries, especially India, North Africa, China and America. India is one of the largest producer and consumer of cumin seed. India's annual production of cumin seed ranges between 1 lakh metric tons to 2 lakh metric tons. Besides India, cumin seed is cultivated in Iran, Turkey and in Syria mainly for exports. It is widely used as spice and for medicinal purpose all over the world. In the West, it is used mainly in veterinary medicine, as a carminative, but it remains a traditional herbal remedy in the East.

India Sowing Harvesting Peak Arrivals Oct-Nov February March-April

Syria Nov-Dec May July

Turkey

Iran

July Mid July

June Mid July

India's harvest enters the global market before other countries. Thus, the Indian crop holds a major advantage in the international markets. Cropping Season of India: Region Saurashtra North Gujarat Rajasthan Cultivation Period 20 Oct. to 20 Nov. 01 Nov. to 25 Nov. 10 Nov. to 10 Dec. Harvesting Period 15 Jan. to 15 Feb. 01 Feb. to 15 March 01 March to 31 March

Peak Season: - 15 February to 15 May.

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Indian Scenario:
India is one of the major producer and consumer of cumin in the world. Almost 80% of the crop cultivated is consumed in India itself.

Major producing area:

Exclusively

cultivated in Rajasthan and Gujarat. Banaskantha and Mehsana in

Districtwise Cumin Production in Rajasthan Others 7% Ajmer 3% Barmer 31% Jodhpur 11% Sirohi 1% Nagaur 7% Jalore 35%

Gujarat, and Barmer, Jalore, Jodhpur and Nagaur in Rajasthan are the major Jeera producing area. Both the states together contribute more than 95% of total countrys cumin

production with Gujarat contributed around 85% of total production. West Bengal, Uttar Pradesh, Andhra

Pali 5%

Pradesh and Punjab also make significant contribution to Indian output.

Districtwise Cumin Production in Gujarat

Others 25% Junagadh 5% Porbandar 6% Patan 11% Surendranagar 18% Jamnagar 13% Rajkot 9%

Banaskantha 13%

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Production Trend of Jeera in India from 1999-2007

600000 500000 400000 300000 200000 100000 0 1999-2000 2000-01 2001-02 2002-03 2003-04 20004-05 2005-06 2006-07 Area(Ha)
Source: Spice Board

Production(ton)

The sowing acreage of cumin seed normally ranges between 3.5 to 5 lakh hectares depending on weather and the prevailing prices of the commodity as well as export demand. Sowing in 2008-09 was higher but erratic weather conditions and diseases spoilt the chances of higher yield. The sowing in this season is bound to get affected on account of hot climate in the key producing area. The crop output is to fall by around 20-25% in the current crop season. Indias export: As per the recent Spice Board Data, India exports were around 6,000 tonnes of jeera in September 2009 up by 187% as compared to the same period last year. In value terms there is a growth of around 160% in September, 2009.
Jeera Export Countrywise(2007-08)
Others South Africa 24% 2% Japan 1% Vietnam 3% Egypt 3% Bangladesh 6% Singapore Malyasia 7% 4% Netherlands 4% UK 7% USA 11% Nepal 10% UAE 10%

Brazil 8%

Source: Spice Board

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Indian Exports of Jeera Qty(in tonnes) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 E
Source: Spice Board

Value(in Rs. Lakh) 5884 11529 9819 20150 29150 54400 20800

% Change in value

% Change in quantity 98 -18 102 8 88

7957 15767 12879 26000 28000 52500 29000

96 -15 105 45 87

Indias export of Cumin to various countries from 2005-08

India's Export of cumin to various countries

5000 4000 3000 2000 1000 0
Si ng ap or e B an gl ad es h M al ya si a U SA N ep al U A E B ra zi l U K

2005-06

2006-07

2007-08

Source: Spice Board

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Syria Scenario: Cumin is mainly cultivate din Syria for exports. The 95% of the Syrian production is concentrated in the region of Aleppo, Idleb, Hama, Al-Rakka and Homs with Aleppo contributing around half of it. The production figure has shown high fluctuations mainly due to the changes in the total acreage area. Syrias Production and yields of Cumin from 2001-2008 can be understood from the chart below:
120000 100000 80000 60000 40000 20000 0 200001 200102 200203 200304 200405 200506 200607 200708 Yield 200809 E 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

Production
Source: NAPC database

In Syria, the crop which was 6000 tons is approximately around 15,000 tons so its 150 5 more than the average crop of 10, 000 tons. About 50 % of the crop in Syria is cornered. All the 15000 tons cumin ahs been harvested and is with stockiest as per traders.

Syria Regionwise Cumin Production Al Hassakeh 2%

Homs 2% Al Rakka 3% Hamma 16%

Aleppo 54%

Idleb 23%

Source: NAPC database

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Global Demand Scenario: Total annual consumption of cumin seed in India ranged between 18-19 lakh bags, while around 4-4.5 lakh bags were exported per annum since the last three years. In Syria and turkey only 10 % of the crop is for domestic consumption. However, Indias export demand this year is bound to fall due to bumper crop in Syria and Turkey.

World Consumption of Cumin (Average)

120,000 100,000 80,000 60,000 40,000 20,000 0
U SA Pa ki st an Eu ro pe la de sh In di a hi na ca st of w or er i ld

Ba ng

La ti n

A m

WORLD CONSUMPTION OF JEERA (AVERAGE) Country Tonnes Bangladesh Pakistan USA Europe China Latin America India Rest of world (except India) Total Consumption 15,000 10,000 15,000 5,000 10,000 9,000 100000 23,000 187,000 tonnes

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Current Situation in India:

As of now the stock in the Indian markets is just around 8-9L bags as compared to 1617L bags during the same period last year. Also, stock with the Turkey, Syria is also less. This would mean tight supply situation in world Jeera market. Also, there are good export enquires from European, Singapore and USA in past few days. , there are reports of export demand of nearly 100 tonnes from Singapore and China. Also Export rate for Indian Jeera is lower at $2400 per tonne as compared to other competing countries like Syria ($2750 per tonne) and Turkey ($2800 per tonne) except China ($ 2200 per tonne) for Singapore quality. Demand from overseas market is expected in the coming days due to competitive prices. This would mean that India would at least require around 2-2.5L bags just to satisfy the export demand till the new crop arrives. Also, the average domestic demand from November- January till the new crop hits the market would be around 4.5L bags. This would be mean around 6.5-7L bags. Hence only around 3L bags would be carried forward next year. This is only around 10-13% of the total production. Also, the hot climate in Gujarat and Rajasthan would lead to the delay in sowing in both the key producing area. It is estimated that the sowing would decline by around 15-20%. This would adversely affect the total output of the crop. However, it would preemptive to see impact on output. Lesser carry forward stock and lower production would mean tight supply situation in India next year. Also, rise in export demand on competitive prices would lead to the rally in Jeera prices. Hence, based on above factors one can see sharp up move in Jeera prices in shortmedium term.

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Price Outlook:

Jeera-NCDEX Weekly Continuation Chart

Technically speaking, on weekly continuation chart there is trend line breakout backed by good volumes. On weekly basis the volumes has risen to20-21,000 tonnes compared to 1213,000 tonnes in past few weeks. This indicates long positions building in Jeera futures. Recommendation: One can build long positions in November contract either on dips around Rs. 12,550-12,700 or on breakout of Rs. 13,100/quintal for target of Rs. 13,600-14,200/quintal with Stop loss below Rs. 12,200/quintal. One can build positions in December contract based on the levels in order to avoid rollover cost. S1 12,450 S2 12,200 R1 13,100 R2 13,625

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27-Oct-09

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