Fresh buying seen in MCX Cardamom

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Cardamom on MCX settled up by 0.34% at 1306.2 on short covering despite traders remained on the sidelines amid muted physical demand for cardamom in the domestic spot market. Prices gained recently after the update that India’s production is likely to fall by 30-40% in 2016-17 due to unfavourable 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.

Farmers did not want to sell fearing delayed receipt of sale proceeds while the buyers were not enthusiastic to buy for want of sufficient funds and that in turn led to the suspension of over 50 per cent of the auctions last week. Small cardamom exports from India are likely to earn as much this fiscal as the last one despite a shortfall in volumes, as shippers are getting good price for the spice. In 2015-16, India had exported a record 5,500 tonnes of small cardamom valued at Rs 450 crore following a bumper crop.

This time, however, the production is expected to be nearly half due to a long drought before monsoon. Technically market is under fresh buying as market has witnessed gain in open interest by 7.16% to settled at 554 while prices up 4.4 rupee, now Cardamom is getting support at 1288.8 and below same could see a test of 1271.4 level, And resistance is now likely to be seen at 1316.8, a move above could see prices testing 1327.4.

Trading Ideas:

–Cardamom trading range for the day is 1271.4-1327.4.

–Cardamom prices ended with gains on short covering despite traders remained on the sidelines

–Prices gained recently after the update that India’s production is likely to fall by 30-40% in 2016-17 due to unfavourable weather conditions.

–Farmers did not want to sell fearing delayed receipt of sale proceeds while the buyers were not enthusiastic to buy for want of sufficient funds.

–Cardamom prices in spot market dropped by 12.70 rupees and settled at 1335.00 rupees.

Courtesy: Kedia Commodities

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