No immediate upside can be seen in coriander, considering the huge stocks and arrival pressures ahead. The downside, too, will be restricted due to lower output.
Ravindra V Rao
After a multi-year low in July 2018, prices of coriander rebounded in Q4 2018 on concerns about lower acreage in Gujarat, one of the leading coriander-growing states of India. However, the bears have once again gripped the coriander market since February as farmers liquidated stocks expecting the new crop to commence arriving.
Also, the weather had turned favourable regarding the yield. Thus, prices in the last one month have dropped by around 9-10 percent.
In the last 3-4 years, Gujarat has been among the leading coriander-growing states. However, farmers preferred sowing jeera and other rabi crops instead of coriander as the price of this spice has fallen in the last two years. Also, water shortages kept land unplanted.
Nevertheless, being seasonal, coriander follows a production cycle: two to three years of higher output are followed by two to three years of lower production. Higher output, rising imports and eventually huge stockpiles exerted pressure on the prices. Thus, coriander has now entered the low-production phase.
In state of MP, acreage is reported 20.5 percent lower while that in Rajasthan, sown area declined 14 percent. The highest drop, however, is seen in Gujarat, where sowing is down 55 percent lower. Despite the water shortage, yields have been stable across all the states and were around 1,214kg a hectare. The all-India coriander output in 2019 is expected to drop by 23.5 percent to 2.47 lakh tonnes, led by Gujarat with a 51 percent drop.
Despite the expected lower output in 2019, carried-forward stocks are still huge. Moreover, new crops have started arriving at mantas and would increase in coming weeks. Thus, no immediate upside can be seen in coriander, considering the huge stocks and arrival pressures ahead. The downside, too, will be restricted due to lower output. As arrivals start to dwindle, coriander markets are bound to take a U-turn over the long term.
The author is Head - Commodity Research & Advisory at Anand Rathi Shares and Stock Brokers.
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