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Technical analysis of Jeera

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CHAPTER 8 TECHNICAL ANALYSIS OF JEERA 8.1 INTRODUCTION Jeera or cumin seed is a dark coloured, oblong shaped and sharp flavoured aromatic spice. It is dried fruit of an annual, thin-stemmed cumin plant, scientifically known as Cuminum cyminum, belonging to the parsley family. It is an annual herbaceous plant. The plant has a height of 30-50cms. The plant has white to red coloured flowers which produce the fruits for the plant. These fruits are consumed as a flavouring agent in whole or grounded form all over the world. The seeds come as paired or separate carpels and are 3-6mm long. They have a striped pattern of nine ridges and oil canals. They are oblong-shaped, brownish in colour, hairy, tapering at each extremity, with tiny stalks attached. They resemble caraway seeds. However, they are lighter in colour and have minute bristles which are hardly visible to the naked eye. They are available dried, or ground to a brownish-green powder. The cumin seeds are nutty, pungent, slightly bitter and hot. Jeera has been used since historic times dating back to 200 BC. It was originally grown in Egypt, India, Iran and the Mediterranean region. Jeera has significant demand as a spice all around the globe, especially in the countries where spicy food is preferred. It is an essential component of the recipes in various cultures. Next to pepper, Jeera is considered to be the most important spice in the world. For heightened aroma, the whole seeds are roasted for a couple of minutes in a dry skillet or toaster oven before grinding. Jeera in grounded form forms part of various spicy mixtures, the most important being ‘Garam masala’ (extensively used throughout South Asia), which are again used to add pungency to dishes and cuisines. It is used in chilli and curry powder blends, fish, lamb, pickling, sausages; Middle Eastern, Asian and Mediterranean recipes. Jeera is also known for its medicinal characteristics and hence, it is used in many Herbal and Ayurvedic medicines. Jeera is antispasmodic, astringent, carminative, diuretic, emmenagogic, stimulant and stomachic. It is useful in diarrhoea, dyspepsia and hoarseness, and may relieve colic and flatulence. In the West, it is mainly used in veterinary medicine, as a carminative, but it remains a traditional herbal remedy in the East. It is supposed to increase lactation and reduce nausea in pregnancy. Used in a poultice, it relieves swelling of the breasts or the testicles. Smoke in a pipe with ghee, it is taken to relieve the hiccups. Jeera also stimulates the appetite. 8.2 JEERA CULTIVATION Jeera plant basically thrives in a hot, tropical or semi-tropical climate, but can also be cultivated in the cooler regions in a green house. Jeera crop can be produced on almost all soil types but the best soil for this crop, is a well-drained, fertile sandy soil. Jeera plant has a good tap root system that makes it a drought resistant plant. Temperature range of about 25-30ºC is best for its growth. It requires minimum of 3 to 4 months of duration period after which it is harvested. Jeera is grown from seeds and is vulnerable to frost damage at flowering and early seed formation stages. To safeguard from frost damage, measures such as spray of sulphur dust and sulphuric acid (0.1%), creating early morning smoke cover, irrigating crop before frost and setting up of windbreaks are used. About 5-6 kg per acre of seeds is required for optimal production. The plant is also susceptible to pest attacks and requires proper use of pesticides for seeds to grow well. In India, the Jeera plant is grown as a rabi crop, i.e., it is sown in the winters in the months of October to December and is harvested in the months of February, March and April. In other Jeera cultivating countries in the Middle East, the crop is planted in the months of late November to January and is harvested in the months of June and July. The plant becomes mature and ready to harvest when it turns yellowish brown. After the crop gets harvested, the cumin seeds are cleaned up through the winnowing process. 8.3 JEERA CYCLE
Months Nov-Dec Jan-Feb Mar-Apr May
Arrivals Sowing Growth Peak Arrivals Lean Arrivals
8.4 JEERA PRODUCTION Jeera is cultivated in the regions in North Africa, southern parts of the North American continent and Southern Asia. The major Jeera producing countries are India, Turkey, Syria, China, United States of America, Iran, Indonesia, Sudan, Egypt, Morocco, Algeria and Libya. India being the world leader in the context of spice production, it is also the largest producer of Jeera in the world. The country produces 80% of the world production and consumes 90% of its own production. The other major producers are Syria 7%, Turkey and Iran 6% each and other countries remaining 11%. India is the major producer & also possesses the maximum area in the cultivation of the spice. Though Syria, Turkey and Iran have a much lesser level of production as compared to India, but these countries have a significant influence in the determination of world Jeera prices, as they export most of their production, while in India, most of the production is consumed in the country itself. 8.4.1 Production of Jeera in India Gujarat is the largest Jeera producing state in the country. It contributes around 70% of the country’s production and also has the maximum area under Jeera cultivation i.e. around 4 - 5 lakh hectares. Rajasthan is the second largest cumin seed producer in India. Rajasthan and Gujarat contribute to approximately 99% of the production in the country. Jeera consumption has been almost consistent in the country for past few years. The major districts that are indulged in the production of this crop are Ajmer, Barmer, Bhilwara, Bikaner, Jaisalmer, Jalore, Jodhpur, Nagaur, Pali, Sikar, Sirohi and Tonk in Rajasthan; Amreli, Banaskantha, Bhavnagar, Jamnagar, Junagarh, Fig 8.1 shows the Jeera producing states of India with their percentage share. Fig 8.1: Jeera Producing States in India with their percentage share Table 8.1 shows the annual acreage, production and per acre yield of Jeera in India Table 8.1: Acreage, Production & Per Acre Yield of Jeera
Year Area (’000 hectares) Production (’000 tons) Yield (Kg/hectare)
2000-01 315.78 139.36 441
2001-02 526.63 206.41 392
2002-03 521.25 134.75 259
2003-04 413.03 215.38 522
2004-05 367.68 176.07 479
2005-06 403.03 199.85 496
2006-07 408.65 185.00 453
2007-08 477.94 264.86 554
2008-09 527.13 283.00 537
2009-10 517.13 303.94 588
2010-11 625.08 403.74 646
2011-12 842.56 461.16 547
2012-13 593.98 394.33 664
Source: Spice Board Mehsana, Patan, Sabarkantha, Rajkot and Surendranagar in Gujarat; Mandsaur and Nimach in Madhya Pradesh. India’s production sums up to 2 - 4 lakh tons of Jeera per year which makes it the leading producer in the world. The country also has the largest area allotted towards Jeera production i.e. around 5 - 6 lakh hectares. The level of production and the total area under Jeera cultivation has significantly increased during the last few years. 8.5 JEERA MARKETS & CONSUMPTION India is the largest consumer of Jeera in the world. The major trading centres or ‘mandis’ of Jeera in India are Rajkot and Unjha in Gujarat; Bhawani Mandi, Jaipur, Jhalarapatan, Jodhpur, Kekri, Kota, Nagaur, Nimbahera, Niwai, Pali, Pratapgarh, Ramganj Mandi and Rani in Rajasthan; and Delhi. The domestic consumption demand of the spice in the country is around 2 – 2.5 lakh tons and the rest of the production is used for export purposes. The by-products of cumin seeds like oleoresins of cumin seeds and cumin oil are also exported from India. Most of the demand for cumin seeds comes from the food and food processing industry and the world’s total demand except India’s demand sum up to a mere 50 thousand tons. The major Jeera consuming countries of the world include India, Mexico, Portugal, Spain, Turkey, China, Japan, Netherlands, France and Morocco. Fig 8.2 depicts the Jeera importing countries along with their % share. The world market structure regarding Jeera is very much concentrated as bulk of the production is performed by a fewer countries and only those countries are able to export this spice to the rest of the world. The major cumin seed exporting countries are India, Turkey and Iran. India was the primary exporter of cumin seeds and cumin oil in the world since few years but comparatively new entrants in the market like Turkey and Iran are providing stiff competition to now. These countries are able to provide the spice at much cheaper prices than India and hence are gaining advantage over it. Most of the cumin seeds are exported to the countries that do not produce Jeera themselves and make huge markets for the spice. Fig 8.2: Jeera Importing Countries with percentage share These countries are United States of America, Sri Lanka, United Kingdom, Netherlands, Japan, Brazil and Singapore. Table 8.2 shows the annual export quantity and value of Jeera to various countries. Table 8.2: Export Quantity & Value of Jeera
Year Export Quantity (in MT) Export Value (in Rs. Crore)
2007-08 28000 291.50
2008-09 52550 544.00
2009-10 49750 548.25
2010-11 32500 395.98
2011-12 45500 644.40
2012-13 79900 1093.8
Source: Spice Board 8.6 USES OF JEERA Jeera has high nutritive value as it contains fat, carbohydrates, proteins, fibre vitamins and essential minerals. Jeera is used as a spice for its distinctive flavour and aroma. It is an essential ingredient in most cuisines in South Asia, Latin America and Northern Africa. Jeera is known to possess anti-diabetic, anti-epileptic, anti-fungal, anti-microbial, anti-oxidant, anti-tumor and Immunologic properties. Jeera is used for medicinal purposes in Ayurvedic medicines in India. The dried Jeera seeds are used in various forms for internal and external usage. Jeera is used for its qualities of enhancing appetite, digestion, lactation, strength, taste perception and vision. It is used for treating diseases like abdominal distension, diarrhea, edema, fever, loss of appetite, puerperal disorders and vomiting. Jeera Water, prepared by boiling cumin seeds in water is beneficial for chronic fever, heart disease, poor digestion, swellings, tastelessness and vomiting. 8.7 MARKET INFLUENCING FACTORS
  • Seasonal variations
  • Broad range demand
  • Weather fluctuations
  • Structure of the market
  • Flow of information
8.6 CONTRACT SPECIFICATIONS FOR JEERA FUTURES Table 8.3: NCDEX Contract Specifications for Jeera Futures (Applicable for contracts expiring upto May 2014)
Type of Contract Futures Contract
Name of Commodity Jeera
Ticker symbol JEERAUNJHA
Trading System NCDEX Trading System
Basis Ex- warehouse Jodhpur, inclusive of Sales Tax/VAT
Unit of trading 3 MT
Delivery unit 3 MT
Maximum Order Size 150 MT
Quotation/base value Rs per Quintal
Initial Margin 10%
Tick size Rs 2.50
Quality Specification Jeera of Indian origin with the following specifications. Jeera to be necessarily machine cleaned
Foreign Matter 1.0 % basis
Seeds with Stalks 8.0 % max
Damaged, Discolored, Shriveled & Immature seeds 2.0% basis
Insect damaged Matter Should not be more than 0.5%
Test Weight (on count basis) Maximum 300 seeds per gram
Moisture 9% max
*Foreign matter includes anything other than Jeera seeds e.g. sand, silica, pebbles, and other edible/non edible seeds.
Quantity Variation +/- 2%
Delivery Centre At the accredited warehouse(s) in Unjha (up to the radius of 50 Km from the municipal limits)
Additional Delivery Centres At the accredited warehouse(s) in Delhi (within municipal limits), Jaipur and Jodhpur (up to the radius of 50 Km from the municipal limits) with location wise premium/discount as announced by the Exchange prior to launch of contract
Trading Hours As per directions of the Forward Markets Commission from time to time currently –
Mondays through Fridays - 10:00 a.m. to 05:00 p.m.
Saturdays - 10.00 a.m. to 2.00 p.m.
The Exchange may vary the above timing with due notice
Delivery Logic Compulsory delivery
No. of Active Contracts As per launch calendar
Opening of Contracts Trading in any contract month will open on the 1st day of the month. If the 1st day happens to be a non-trading day, contracts would open on the next trading day.
Tender Period Tender Date –T Tender Period: The tender period shall start on 11th of every month in which the contract is due to expire. In case 11th happens to be a Saturday, a Sunday or a holiday at the Exchange, the tender period would start from the next working day.
Pay-in and Pay-out: On a T+2 basis. If the tender date is T, then pay-in and pay-out would happen on T+2 day. If such a T+2 day happens to be a Saturday, a Sunday or a holiday at the Exchange, clearing banks or any of the service providers, pay-in and pay-out would be effected on the next working day.
Closing of Contract Clearing and settlement of contracts will commence with the commencement of Tender Period by compulsory delivery of each open position tendered by the seller on T + 2 to the corresponding buyer matched by the process put in place by the Exchange.
Upon the expiry of the contract all the outstanding open position shall result in compulsory delivery
Due Date/Expiry Date Expiry date of the contract: 20th day of the delivery month. If 20th happens to be a holiday, a Saturday or a Sunday then the due date shall be the immediately preceding trading day of the Exchange, which is other than a Saturday.
The settlement of contract would be by a staggered system of Pay-in and Pay-out including the Last Pay- in and Pay-out which would be the Final Settlement of the contract.
Delivery Specification Upon expiry of the contracts all the outstanding open positions shall result in compulsory delivery.
During the Tender period, if any delivery is tendered by seller, the corresponding buyer having open position and matched as per process put in place by the Exchange, shall be bound to settle by taking delivery on T + 2 day from the delivery centre where the seller has delivered same.
The penalty structure for failure to meet delivery obligations will be as per circular no. NCDEX/ TRADING-086/2008/216 dated September 16, 2008.
Price Band Daily price fluctuation limit is (+/-) 3%. If the trade hits the prescribed daily price limit there will be a cooling off period for 15 minutes. Trade will be allowed during this cooling off period within the price band. Thereafter, the price band would be raised by (+/-) 1% and trade will be resumed. If the price hits the revised price band (4%) again during the day, trade will only be allowed within the revised price band. No trade/order shall be permitted during the day beyond the revised limit of (+/-) 4%.
Position Limits Member: 12000 MT or 15% of Market Open Interest whichever is higher. Client: 2,400 MT The above limits will not apply to bona fide hedgers. For bona fide hedgers, the Exchange will, on a case to case basis, decide the hedge limits. Please refer to Circular No. NCDEX/TRADING-100/2005/219 dated October 20, 2005.
For near month contracts: The following limits would be applicable from 1st of every month in which the contract is due to expire. If 1st happens to be a non-trading day, the near month limits would start from the next trading day.
Member: Maximum up to 1000 MT or 15% of the market-wide near month open position, whichever is higher.
Client: Maximum up to 200 MT
Quality Allowance Foreign Matter 1% basis acceptable up to 1.5 % with a discount of 1:1 Damaged, Discolored, Shriveled and Immature seeds 2% basis Acceptable up to 4.5% with discount as under: Above 2% and up to 4% with 1:0.5 discount Above 4% and up to 4.5% with 1:1 discount bove 4.5% rejected
Special Margins In case of additional volatility, a special margin at such other percentage, as deemed fit, will be imposed in respect of outstanding positions, which will remain in force as long as the volatility exists, after which the special margin may be relaxed.
Final Settlement Price The Final Settlement Price (FSP) shall be arrived at by taking the simple average of the last polled spot prices of the last three trading days viz., E0 (expiry day), E-1 and E-2. In the event of the spot prices for any one of the E-1 and E-2 is not available, the spot price of E-3 would be used for arriving at the average. In case the spot prices are not available for both E-1 and E-2, then the average of E0 and E-3 (two days) would be taken. If all the three days’ prices viz., E-1, E-2 and E-3 are not available, then only one day’s price viz., E0 will be taken as the FSP.
Minimum Initial Margin 5%
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