Dhaniya July futures likely to touch Rs 6,500 over next few days, Guarseed could breach Rs 3,700

Ajitesh Mullick

As mentioned in our earlier reports, the progress of monsoon and rains in the growing areas for kharif crops would determine the short term trend for agri price movements. Last week we saw improved rainfall activities in the North-Western and the Central states of Rajasthan, Gujarat and Madhya Pradesh – along with the Southern states. This kept pressure on the short term market sentiments.

Sowing for the kharif crops pick up after the rains. Early rains are good for the early sowing – and lead to higher possibilities of better sowing and production. This keeps pressure on the prices. These are the early stages of the Monsoon. The next few weeks, too, remain critical for the crops as any excess or deficient rains would have harmful impact on the crops.

Chana: Despite the initial fall in prices due to improved rainfall activities keeping sowing prospects good for the kharif Pulses, markets bounced back later on. It needs to be noted that fundamentals for this commodity are bullish. As prices trade a lot below the MSP (minimum support price) of Rs 4,620 per quintal, and the government is taking all initiatives to benefit farmers by raising their field of operations to get better rates, this remains a bullish factor for the commodity price.

Virtual scrapping of the Essential Commodities Act too is a strong factor that could be expected to keep prices firm in the long term. As good Monsoon reports pour in from most parts of the country, the uptrend for the counter is limited. But sentiments remain firm with the July contract facing immediate resistance at Rs 4,316 per quintal. Above this, prices may well reach the Rs 4,400 per quintal mark.

Related stories

Ajitesh Mullick

VP Retail Research|Religare Broking

• 
  Turmeric prices may recover by year-end, could go above Rs 6,100
• 
  Festive demand, sub-par monsoon to support bullish trend in oil complex prices: Religare Broking
• 
  Agri markets look for recovery this week, focus on spices

Guar: Even as moderate rains in the growing areas of Rajasthan kept upside limited, a rise in Crude oil price, along with firmness in Dollar versus Rupee, supported the market sentiments for Guar as moderate recovery was noted. Traders feel that prices are at very low levels (having already fallen a lot due to lack of exports from coronavirus over the last 3-4 months). Further fall may be un-sustainable for the counter. Guarseed July futures could breach the Rs 3,700 per quintal mark and rise further 100 points above that.

Spices: Even as firm trend gets noted for Jeera, Turmeric and Dhaniya, lack of strong export demand in mandis keeps uptrend in prices limited for the former 2 commodities. Traders however expect the exports to gradually pick up as mandis open. The scare of coronavirus had kept trading activities low over the last 3-4 months. Jeera keeps facing strong immediate resistance at Rs 14,000 per quintal mark for July contract. Any close above the Rs 14,120 mark could see further recovery in prices. Turmeric remains firm as prices face immediate psychological resistance at the Rs 6,000 per quintal mark, while Dhaniya July is facing immediate support at the Rs 6,000 per quintal mark and looks likely to touch the Rs 6,500 per quintal mark over next few days.

Oil complex

Mustard seed: Markets had experienced a few days of downward trend amid selling by the government in Rajasthan and Haryana. But as prices have now fallen significantly in the last 3 days, sellers in mandis are not in the mood to sell further. As a result futures recovered amid aggressive short covering. Existing bullish fundamentals shall continue supporting markets in near term.

Soybean: It traded with light volatility although the primary trend was directed upwards. As near term fundamentals being positive, we expect markets to maintain a firm trend during the greater part of the week. Besides there are lots of reforms being announced for the Agriculture sector, like amendment of the Essential Commodities Act, involving de-regulation of edible oils and oilseeds, thereby enabling barrier free trade by farmers.

Soya oil: It traded lower initially but as global cues turned positive and palm oil started recovering, soya oil bounced back and ended on a positive note. Import demand is improving for Malaysian/Indonesian palm oil as more and more countries have started easing lockdowns. As a result palm oil prices are maintaining an upward trend. The trade relation between India and Malaysia has improved of late, and Indian importers have resumed purchases of Malaysian palm oil last month onwards. Media reports said that large importers have finalized a contract worth 2 lakh tonnes of Crude palm oil from Malaysia, during the first fortnight of May.

All in all, we expect agri markets to trade with high volatility next week also, with Monsoon rains being the most important price determinant factor. With some corrections noted last week, a recovery in prices is not ruled out as the markets closed on a positive note during the end of the week.

The author is VP - Retail Research at Religare Broking.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.