Turmeric, jeera prices hit lower circuit on panic selling

Last Updated: Sat, Jul 28, 2012 18:41 hrs

Fear of possible action against the price rise for agricultural commodities pulled jeera and turmeric down to the lower circuit on the National Commodity & Derivatives Exchange (NCDEX) today.

While turmeric contracts due for expiry in the near month plunged to Rs 5,766 a quintal, jeera fell to close at Rs 15,620 a quintal. The two sensitive commodities in the spices complex came under the government's scanner due to exorbitant price rises in the last month. Data compiled by NCDEX showed turmeric prices surged 37 per cent in the last month, while jeera prices rose nine per cent, with intermittent price volatility.

The Ministry of Consumer Affairs has convened a meeting on Tuesday to take stock of the situation. Consumer Affairs Minister K V Thomas had earlier indicated the ministry had guided the Forward Markets Commission (FMC) to take suitable action to curb the price rise for these two sensitive commodities.

The deficient monsoon is also contributing to the rise in prices. The India Meteorol-ogical Department has estimated India would miss the rainfall target for July, a crucial month for turmeric sowing, as the commodity requires intermittent rainfall for plant germination.

“The acreage under turmeric is likely to fall 30 per cent this season, apparently due to farmers’ disinterest in planting this commodity. Last year, a bumper output helped reduce prices in the spot market to below-production costs. Farmers, therefore, switched to other remunerative crops,” said Ajay Kedia, managing director of Kedia Commodities, a city-based research firm. Broadly, the overall sentiment for agricultural commodities is negative, owing to rainfall this season being about 22 per cent below normal.

The jeera market is seeing panic-selling, owing to fear of possible action by FMC to curb prices. Stockists are now considering exiting the market on news the government was closely tracking the movement of agricultural commodities. The FMC, meanwhile, is playing margin games to control prices. The special margin on turmeric has been increased from 20 per cent (in cash) to 40 per cent on the long side on all running, as well as yet-to-be-launched contracts.

“Jeera has also seen heavy profit booking due to the market's concern on the meeting to be held on Tuesday. Another reason for jeera hitting the lower circuit is demand not pouring in at higher levels,” said Fiyaz Hudani, research analyst with Kotak Commodity Services. “Fundaments are supportive to a spurt in prices. Therefore, the price of the commodity should rise. But owing to the scheduled meeting on Tuesday, traders are booking profits,” he added.

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