Jeera July futures in NCDEX touched a record high of Rs. 58,085 per quintal on Monday, before coming down to around Rs. 55,500 on Tuesday.
This was due to profit booking and extension of additional surveillance margin of 2.5 per cent till July 18, including on all contracts to be launched in the future.
The softening, according to some reports, is also because of fears of regulatory action on jeera traders over allegations of excessive speculation.
Jeera crop has been on fire since the start of this year, soaring almost 55 per cent during the April-June quarter till June 27.
The prices have jumped a whopping 73 per cent since January.
The rally in prices has prompted traders to compare it with gold.
Ten gram gold price on Tuesday was around Rs. 55,000 in Delhi, almost similar to a quintal of jeera in NCDEX.
The rally has been primarily driven by a demand and supply shortage.
Some traders said speculation is also playing a part.
Fundamentally, traders said jeera demand is estimated to be around 8 million bags this year (2023-24) in India (1 bag=50 kgs).
Supply is around 6.5 million bags, a shortfall of almost 23 per cent between demand and supply.
The jeera crop has been impacted mainly due to unseasonal rains in Rajasthan and Gujarat and also due to shifting in acreage to other lucrative options by farmers.
Initially, traders had estimated jeera production this year to be around 7.5 million tonnes but the unseasonal rains in March pulled down output further.
Last year (2022-23), too, India produced around 6.6 million bags of jeera.
The year before that (2021-22), production was almost 8-8.5 million bags.
Traders said panic started when the word spread that jeera crop is seeing a big drop of just around 5 million bags.
They said with such sky-high prices, there would be some sort of intervention.
This may keep the market on tenterhooks for the next few weeks.
“The current situation is a bubble situation, which can burst at any time as the gap between the price and short-term or medium term averages has widened to an all-time high, hinting that any correction will be a big one whenever it comes,” Tarun Satsangi, AGM (commodity research) at Origo Commodities told Business Standard.
