Cardamom futures continued the positive trend with some corrections on profit booking during the week ended on Feb. 04th.
From starting of the week futures traded higher on follow though buying. Good demand at domestic as well as export front pushed the prices on higher note.
However, sudden rise in arrivals due to hike in spot prices weighed in sentiments and futures took decent corrections on profit booking.
Nonetheless, overall positive trend remained intact which was also reflected in higher export ate offered by exporters. Thus, on cues from spot activity futures prices traded up and ended on positive note.
Outlook
Cardamom futures are projected to continue the positive trend on rising demand. According to the trade source, end of current harvesting season is approaching might result in decline in supplies in coming days. On other hand, good demand from bulk buyers from north India states is likely to support the prices.
Average spot prices at auction held in Kerala have also reported a significant growth. Brisk buying activity from exporters due to end of harvesting season might also add to the upside.
Factors to watch out
Arrivals Daily auction activity in remained in the range of 31-124 tonnes while prices hovered in the range of Rs. 484-547 per Kg.
According to data released by Spices board, cardamom exports during Apr-Nov, 2011 were up by 444% to 3,100 tons against same period in last year
Total arrivals at spot auction till January 22nd were reported around 10,410 tonnes 6,910 tonnes arrived during same period last year
As per Spices Board data, international price of Cardamom in Saudi Arabia market improved to $17.30 per kg during the week ended January 27th 2011; however, it was lower than $30.88 per kg quoted in the same period last year
MCX warehouse stocks of Cardamom as on February 02, 2011 were 18.6 tonnes
Derivative Analysis
The MCX cardamom February contract prices and volumes have increased while open interest has declined.
It is a good indication that market has a lot of traders initiating from both sides but larger traders are liquidating into the higher prices.
The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of day.
Technical
A strong breakout through the falling wedge in cardamom generic chart is keeps the prices in positive zone. During the week prices have made a high of 693.60 against the low of 659.30 and finally settled at 686.10 by +2.22% up from last weeks closing prices.
On initial bias remains upside this week for further rally towards the next resistance of 720 then 759 levels which is 5.% and 61.8% Fibonacci levels of the previous fall, starts from 891.8 to 546.20 levels.
However, initial session of the week we are expecting some downward correction towards 675 - 665 levels, which is going to suggest possible accumulation levels for the fresh buying in near-term perspective.
Weekly momentum indicator RIS-14 period trading at 0.58 levels by supporting our bullish view an upside crossover from the Mov.Avg in MACD is also another supporting aspect for taking the bullish view in coming sessions.
Courtesy: Karvy Commtrade Ltd.
