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Spice prices become too hot to handle

business Updated: May 09, 2007 23:02 IST
Vyas Mohan
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Buy and store enough spices for the rains and winter ahead, or else you may end up shelling out more on the condiments.

An increase in the supply-demand gap at both national and global level is expected to raise the prices of spices in the coming days, according to analysts.

Despite a cut in prices of Vietnamese pepper, which took the flavour off Indian black pepper, the price of the commodity is expected to shoot up due to a drop in supply. While the supply shortfall at the global level is expected to raise the price of black pepper, the situation looks quite grim in India.

“It is a wrong notion that the reduction pepper prices by Vietnam would pull the price of Indian pepper down. While at the global level, a supply shortfall of 5-10 per cent is expected, in India, it could be as high as around 30 per cent. Pepper prices could touch Rs 200 per kilogram in a few months,” said an analyst with IL&FS. On Wednesday, pepper Malabar garbled was trading at Rs 150.85 per 100 kilogram on the Kochi spot market.

With the price of Vietnamese pepper slipping below $4,000 per tonne, pepper futures had lost 2.5 per cent on Tuesday. At 5:30 pm on Wednesday, pepper contracts for May delivery were trading at Rs 14,990 per quintal on the National Commodity and Derivatives Exchange (NCDEX), as per data available on the exchange website.

Prices of jeera (cumin) are also expected to rise substantially due to a lower crop output and lack of any other source for the commodity, till August, other than India.

“The crop output in jeera could be just half of what it was the year ago. Till August, there is no source for jeera other than India. August is when crop comes out from countries in the middle-east region. Even then, that output is very small when compared to the global demand,” the analyst said.

Jeera was trading at Rs 12,708 per quintal at the Unjha spot market, while contracts of the commodity to be delivered in May was trading at Rs 11, 870 per quintal on the NCDEX.

Chilli prices are also expected to go up immediately as the demand is seen picking up ahead of the rainy season and a short closure of the Guntur spot market, a major trading hub of the commodity.

“Chilli futures may gain around Rs 100 per quintal in a week’s time. The commodity is witnessing good demand. Further, the Guntur spot market will be closed from May 14 to June 3, which will create some supply shortage,” said an analyst with Motilal Oswal Commodities.

Chilli was trading at Rs 4,615 per quintal in the Guntur spot market. Chilli prices have gone up by Rs 136.65 per quintal in the last six trading days. At 5:43 pm, chilli futures for June delivery were trading at Rs 5,039 per quintal on the NCDEX.