Cardamom Market Under Short Covering

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Cardamom on MCX settled up by 0.58% at 1382.2 on account of poor production caused by prolonged dry weather condition in Kerala, the largest producing state. India’s production is likely to fall by 30-40% in 2016-17 due to unfavorable weather conditions. Prolonged dry weather occurred in the Idukki district, which has severely affected yield of the crop, which was in the flowering stage at that point of time. In many cases, the plants have been partially or fully destroyed due to the dry weather, as many plantations in the region do not have irrigation facilities.

The Spices Board had reported in June that cardamom crop loss due to deficient rainfall and high temperature is likely to be up to 20-25% during the 2016-17 crop season. Damage to plants in Idukki due to drought-like conditions is 5-10%. Board data shows production of small cardamom during 2014-15 pegged around 18,000 tonne from 69.970 hectares. Exports of cardamom during 2015-16 are pegged at 5,938 tonne as compared to 4,371 tonne during 2014-15. The dry spell, prevailing in the growing regions of Idukki district, where 75 per cent of the cardamom is grown, is signaling of a further drop in the crop. Decline in the north-east monsoon which is expected in the coming days would result in severe water shortage in the growing areas.

This phenomenon has also prompted the stockists and others to cover now, Diwali buying is also under way and it is expected to stay for two – three days. Technically market is under short covering as market has witnessed drop in open interest by -11.75% to settled at 946 whi.

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