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Coriander futures to remain bearish amid weak domestic and export demand

Date: 15-05-2020
Subject: Coriander futures to remain bearish amid weak domestic and export demand
Coriander Seed is commonly known as 'Dhaniya' is a Rabi Spice sown/grown in the winter season during the months of October to December. The major states constitute Madhya Pradesh, Rajasthan, and Gujarat and the usual new crop harvesting period happens from February to April months of every year. The sowing of Coriander seed depends on the winter weather conditions during the said period. Cooler temperatures with good amounts of water content in the soil improve the yield for sowing and eventually increases the production during the harvest period. Price also plays a critical role that would determine how much sowing the farmers are ready to do in the above period.

Higher prices are generally forecasted to increase sowing of Coriander seeds while lower prices can possibly lead to crop switching to other crops such as Mustard, Garlic and Chana in the earlier mentioned states respectively. There are various variants of coriander seeds grown in India mainly Badami, Eagle, Scooter, Single Parrot, Double Parrot and Special green. Prices differ with different variants based on quality and moisture content in the coriander seeds.

The variant that is listed in the NCDEX exchange is the Badami Coriander seeds which are basically light brown in color. India is among the top producers and exporters of Coriander Seed in the international market. Other global market producers of Coriander seeds include Russia, Bulgaria and Italy.

NCDEX Coriander Future price has traded volatile during the month of April and May so far owing to lockdown situation in the major states of Madhya Pradesh, Gujarat and Rajasthan. This has led to near negligible arrivals in the domestic markets eventually leading to no major price discovery between the spot and the future prices.

But then prices have mainly remained on the lower side amid higher stocks from last year and the expectation of higher production for the year 2019-20.

Fundamentally for the month ahead, we are expecting NCDEX Coriander futures to witness downtrend as the demand during the current season is estimated to be lower due to continued lockdown situation in the said states due to rising COVID-19 cases on a daily basis. Current year masala millers buying has been only 60-65% of their total capacity which is not likely to support the prices in the coming month June.

Moreover, good monsoon forecasts in the current year could keep the market sentiment weak. The pending harvesting due to lockdown situation has been nearly completed and so far there have been no major crop damage reports. In addition, the export demand from India in the current period is lower due to higher supplies from global producers such as Russia and Bulgaria.

India also imports coriander seeds from Russia and Bulgaria during the June-August period due to higher medicinal value in the coriander seeds from the said countries compared with the native. But then, extremely lower prices of coriander could bring fresh buying from the downside. In consideration with the above factors, we are bearish on NCDEX Coriander Futures for the month ahead.

For short term prospects, one can initiate a short position in NCDEX Dhaniya (June) at CMP Rs 5,630 per quintal or rise in the prices till Rs 5,700 level, should be used as a selling opportunity for the downside target of Rs 5,100/4,900. However, the bearish view can be reversed if NCDEX Dhaniya (June) Futures close above the resistance of Rs 6,000. Overall, we maintain our bearish view in NCDEX Dhaniya (June) Futures for the month ahead.

Source:- moneycontrol.com

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