www.investsmartindia.

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A presentation by the IL&FS Commodities Division

Spices Of Fortune
All India Spices Conference 7th Oct 2006, Bangalore

Chillies
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www.investsmartindia.com

A presentation by the IL&FS Commodities Division

????? 6500/qtl !!!

@
Chillies

Who has stolen my chillies ?

Agenda of the presentation

1.
2. 3.

Overview
Supply-n-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

Agenda

Overview

India

Major Producer, consumer & exporter in the world

Chilli accounts for 20-30% of total Indian spices exports valuing approx 400500 crore Practically all the states in India grows chilli resulting in arrivals round the year. Andhra Pradesh is a leading producer of commercial grade of chilli

Agenda

Indian Supply n-Demand

State Wise contribution of Chilli

18% 8%

AP 27% Karnataka MP Maharashtra Orissa

2% 9% 12% 19% 5%

UP TN Others

Agenda

Overview

Global

India contributes for around 25% of world chilli production

Other major producer are China, Pakistan, Morocco, Mexico, Spain and Turkey Chilli contributes for 22% of world spices trade in terms of volume. Globally China is emerging as major threat for India Asian countries consumes chillies directly while USA and EU imports mainly for its oleoresin requirement

Agenda

Overview

Agenda of the presentation

1.
2. 3.

Overview
Supply-N-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

Agenda

Supply N- Demand

Acreage and Production

Year 2001-02 2002-03 2003-04 2004-05 E Area 8.8 8.5 9.9 9.5 Production 10.6 8.8 11.0 10.0
12 10 8 6 4 2 0 2001-02 2002-03 2003-04 2004-05 E 2005-06 E

Acreage and Production of Chilli

Area Production

2005-06 E

9.5

10-10.5

Stagnant or Declining Acreage and Production

Agenda
Exports

Supply N- Demand

Share of Chilli in Indian spices export is around 20-40% in volumes

India export its chilli mainly to Srilanka, Bangladesh, Korea, Malaysia, Singapore, Japan, UK, Germany, France and USA

Share of major items in Indian spices export(Qty)

Other seeds 11% Ginger 3% Curry powder 2%

Other Spices 6%

Chilli 42%

Coriander 10% Cumin Mint product Pepper 4% 4% Turmeric 2% 13% oils & oleoresin 3%

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Agenda

Supply N- Demand

Exports - India
Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 E 2005-06 E Quantity (tons) 63,591 62,448 69,998 81,022 86,575 138000 113250 Value (Rs. Lakh) 25471.55 22973.30 25244.02 31514.68 36687.81 49900.50 40350.00
160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
19 99 -0 0

Export -Volume and Value

60000 Qnty (tons) Value (Rs. Lakh) 50000 40000 30000 20000 10000 0
20 00 -0 1 20 01 -0 2 20 02 -0 3 20 03 -0 4 E 20 04 -0 5 20 05 -0 6 E

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Agenda
Exports

Supply N- Demand

Country wise Percentage share of exports

India (25%) China (24%) Spain (17%) Mexico (8%) Pakistan (7.2%) Morocco (7%) Turkey (4.5%)
Turkey 5% Morocco 8% Pakistan 8% Spain 18% Mexico 9% India 26%

China 26%

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Agenda

Supply N- Demand

Balance Sheet 2005-06

Sheet Beginning Stock Production Total Supply Exports Domestic Consumption Total Demand 2005-06 (Lakh Tonne) 1.1 10 11.1 1.0 10.1 10.0 Price Sensitive

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Agenda of the presentation

1.
2. 3.

Overview
Supply-n-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

14

Agenda

Challenges Ahead

Adverse climatic conditions - Floods, drought, unseasonal rains etc

Increasing consumption - Growing population need

Emerging competitors - China Future threat to Indian exports

Lack of sufficient carry over stocks - Due to increase in consumption

Malpractices and Speculation - On the basis of growing opportunities

Numerous varieties within same region

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Agenda of the presentation

1.
2. 3.

Overview
Supply-n-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

16

Agenda

Chilli on Exchange

Chilli first got remarkable participation on NCDEX futures exchange Sanam best Guntur delivered was the first contract launched but was

withdrawn on operational issues

LCA 335 variety contract introduced - March expiry & onwards Contract trading lot is of 5MT (1 Re change = Rs.50) Margin requirement = 15-25% (Case dependent) Contract is of 3 months expiry Client wise limit is applicable and is 5000 MT (Near month 1000 MT only)

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Agenda

Chilli on Exchange

NCDEX Chilli Average Volume, OI, Value

Contract months March April June July Aug Sep Oct (4 oct) Nov (4 Oct) Dec (4 oct) Average Volume (MT) 3431.42 4838.11 4686.9 4059.7 5075.6 5430.6 9640.8 4372.4 4355.7 Average Open Interest 5756.78 5905.5 6445.1 6245.9 8906.9 6467.1 9951.7 5336.4 9016.3 Average Traded Value (Rs. In lacs) 1114.29 1778.9 2313.9 2056.1 2599.3 2961.4 5851.7 2765.9 2801.4 18

Agenda

Chilli on Exchange

Exchange Deliveries & Settlement

Expiry Month April Settlement prices/tonnes 36020 Total Value lakhs 3.6

Qty(MT)

10

June July Aug Sep

885 2690 1690 2340

44630 48390 54810 51770

394.97 1301.69 926.28

1211.41 19

Agenda of the presentation

1.
2. 3.

Overview
Supply-n-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

20

Agenda

Exchange Advantage

Price discovery
Indias branding on world trade Hedge availability to corporates and individual traders

Arbitrage opportunities Investment demand

Directional trades or speculation Jobbing and Punting

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Agenda of the presentation

1.
2. 3.

Overview
Supply-n-Demand Challenges Ahead

4.
5. 6.

Chilli on Exchange
Exchange Advantages Price Outlook

22

Agenda

Price Outlook

Forecasting model
Fundamental Analysis - SND, Policies, Weather situation etc Derivative Analysis - Study of volume, Open Interest and Spreads Technical Analysis - Chart based study and forecasting of prices

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Agenda

Price Outlook

Technical Analysis

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Agenda

Price Outlook
Chilli LCA 334 NCDEX=5805.00 trend retrace label2 0 6600.00 6400.00 6200.00 6000.00 38.2 50 61.8 5800.00 5600.00 5400.00 5200.00 5000.00 4800.00 100 4600.00 4400.00 4200.00 4000.00 3800.00

Primary trendline intact with support taken recently at 5600. Corroborative evidence of bullishness from the fact that the levels of 5600 - 5800 acted as a strong resistance during early days of May 2006 and has changed from. resistance to support, preventing further decline. Second rally started in August from 4600, making a top of 6600. The 50% Fibonacci retracement of this rally reckons to 5600, which exactly coincides, with our support level. The bull market is in place and the required correction has also come to an end. Any advance above 6100 levels should be considered as a buying opportunity for medium and long-term investors. However intermediate consolidation phase cannot be ignored if it remains below 6100 in the near future. However the probability of prices resuming the uptrend is high.

Resistance acting as support

3600.00

3400.00

3200.00

3000.00 40.3 Jan 1, 2006 May 1, 2006 Sep 1, 2006

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Weekly

Agenda

Price Outlook

Trading Strategy

Buy December Contract on Dips of around 6000

Medium to longer term Target 6700 -7000 Six Month Range = 5500-7500

Exit or play short trades on breakout below 6000 - Dec Contract

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www.investsmartindia.com

IL&FS Investsmart Commodities Limited

Thank You !
K.N.Rahaman Manager Commodities Research 022-67160 851-56

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