Support seen at 1366.6 for MCX Cardamom

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Cardamom on MCX settled up 1.86% at 1383.5 tracking firmness in spot demand due to lower production expectation. Prices also seen supported due to banned currency by Govt. auction not happened regularly in the center. As per sources estimate (First Advance) for 2016-17 Cardamom production likely to around 20,000 MT compared to last year 28,000 MT. 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.

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. 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. Technically market is under short covering as market has witnessed drop in open interest by -5.15% to settled at 553 while prices up 25.2 rupee, now Cardamom is getting support at 1366.6 and below same could see a test of 1349.8 level, and resistance is now likely to be seen at 1404.6, a move above could see prices testing 1425.8.

Trading Ideas:
Cardamom trading range for the day is 1349.8-1425.8.
–Cardamom prices gained tracking firmness in spot demand due to lower production expectation.
–Prices also seen supported due to banned currency by Govt. auction not happened regularly in the center.
–As per sources estimate (First Advance) for 2016-17 Cardamom production likely to around 20,000 MT compared to last year 28,000 MT.
–Cardamom prices in spot market dropped by 3.90 rupees and settled at 1354.20 rupees.

Courtesy: Kedia Commodities

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