Performance Review of Commodity

JEERA

1. Background

a. Brief about the commodity such as sample picture, lifecycle and various varieties/grade of
the commodity found in India

Cumin seed commonly known as Jeera is the dried, white fruit

with greyish brown colour of a small slender annual herb. It
had a major role as a flavoring, spice and medicinal uses
throughout history. In the western countries, it is used mainly
in veterinary medicine, as a carminative, but it remains a
traditional herbal remedy in the East. Besides being used in
Ayurvedic medicines, cumin is also used as a stimulant,
carminative, stomachic and astringent. Cumin seed oil is used
in perfumery and for flavouring liqueurs and cordials.

Generally, raw Jeera is being processed by machine and then the machine cleaned material is generally
sold to spices processing units (Masala Manufacturers) and retail customers.

In India, Jeera is grown as a Rabi crop. Sowing is done during October to December while harvesting
starts from February onwards. It requires less water and more cold for its better growth with ideal
temperature of 25 to 30 degree. Jeera crop is highly sensitive to rain/ high humidity and if rain occurs
during harvesting time, quality of the Jeera gets badly affected (it turns black. The major producing
states are Gujarat and Rajasthan in India.

Crop Cycle (India)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sowing Harvesting

Life Cycle: Major Varieties /Grade

Value Chain of the Commodity
Major Varieties

Besides the two main types of cumin seeds, i.e., white

and black cumin seeds, many improved varieties like
S-404, MC-43 Gujarat Cumin-1(GC-1), GC-2, GC-3,
RS-1, UC-198, RZ-19, etc. are available in India.

NCDEX: Quality Parameters

Foreign Matter 1.0 % Max
Seeds with Stalks 8.0 % Max
Damaged, Discolored, 4.5% Max
Shriveled and
Immature seeds
Insect damaged matter Should not be > 0.5%
Test Weight (on count Max 300 seeds / gram
basis)
Moisture 8% Basis, 9.5% Max
Table: Reference Years for Commodities

Sl. No. A B C

Kharif (Long Duration

Season Kharif Rabi
crop)
Paddy, Maize, Bajra, Wheat, Barley,
Crops Moong, Soybean, Guar, Castor and Turmeric Chana, RM Seed,
Kapas, Sesame Seed Coriander, Jeera
Guargum, Soybean meal,
Relevant Processed
Soy oil, Cotton, Cotton seed - -
commodities
Oil cake, Gur, CPO
With Reference to
Production Year (PY) 2019-20 (July to June)
Jan/Feb 2020 to Dec/Jan Mar/Apr 2020 to
Marketing Year (MY) Oct 2019 to Sep 2020
2020/21 Feb/Mar 2021

Financial Year (FY) April 2019 - March 2020 April 2020 - March 2021 Apr 2020 to Mar 2021

Calendar Year (CY) Jan 2019 to Dec 2019 Jan 2020 to Dec 2020 Jan 2020 to Dec 2020

Production Year is
Production Year is
Production Year = previous year.
Relationship b/w previous year. Marketing
Marketing Year = Financial Marketing Year =
Reference Years Year = Financial Year =
Year = Calendar Year Financial Year =
Calendar Year
Calendar Year
PY 2019-20 PY 2019-20
PY 2019-20=MY2019-
Example MY2020-21=FY2020- MY2020-21=FY2020-
20=FY2019-20=CY2019
21=CY2020 21=CY2020

Explanatory Notes:

 India is a vast country and various crops are sown and harvested at different point of time. However,
two major crop seasons, are there i.e. Kharif & Rabi. Apart from it, Zaid/Summer season is also
there.

 Crop seasons are classified based upon sowing time. Normally Kharif season sowing starts from
mid-June/July and new crop arrivals begin from Oct/Nov. However, early/late sowing/harvesting
also takes place. Rabi season sowing usually takes places mainly from October/November and
harvesting starts from March/April. Early/late sowing/harvesting also takes place.

 Summer crops/Zaid crops are short duration crops mainly sown during January-March and
harvested during April-June.

 Production Year is considered as July to June and it remains same for all crops.

 Marketing Year starts from beginning of the new crop arrivals. Thus, for Kharif crops Marketing
Year is generally considered as October to September, while for Rabi crops Marketing Year is April
to March. However, Marketing Year may vary slightly for some of the crops depending upon
early/late maturity/harvesting.

 For processed commodities, their production starts after the start of new season crop arrivals of
their underlying crop.
b. Commodity fundamentals and balance sheet as per the following format (to be prepared
based on publicly available information on best effort basis):

Table - Fundamentals & Balance sheet (quantity)

(In Lakh Tonnes)
Global Scenario Previous FY (2019-20)* Current FY (2020-21)* (P)
Opening Stocks NA NA
Production NA NA
Imports 1.73 1.60
Total Supply NA NA
Exports 2.53 2.86
Domestic Consumption NA NA
Ending Stocks NA NA
Source: UN Comtrade (May 2021); HS codes used are 090931 and 090932;
NA: Data is not available in the public domain; P: Provisional;
*Data is not available as per financial year. It is provided as per Calendar Year (CY) (Jan-Dec);
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

(In Lakh Tonnes)

Indian Scenario Previous FY (2019-20) Current FY (2020-21) (P)
Opening Stocks NA NA
Production 7.00 5.47
Imports 0.03 0.07
Total Supply NA NA
Exports 2.14 2.63
Domestic Consumption NA NA
Ending Stocks NA NA
Source: Production: Spices Board and Import/Export: Ministry of Commerce (HS codes 090931 and
090932);
For FY 2020-21, import and export data is available only for period of Apr 2020 to Feb 2021;
NA: Data is not available in the public domain P: Provisional;
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

(In Lakh Tonnes)

Top 10 Major Producing Countries Top 10 Major Consuming Countries
Rank Current
Country Previous FY Current FY Country Previous FY
FY
NA NA

Data is not available in public domain. India is the largest producer of Jeera in the world, which accounts
for 80-85% of the world production. The other major producers are Syria and Turkey, which together
accounts for rest of the production.

(In Lakh Tonnes)

Top 10 Major Exporting Countries Top 10 Major Importing Countries
Rank Previous FY Current FY Previous FY Current FY
Country Country
(2019-20)* (2020-21)* (P) (2019-20)* (2020-21)*(P)
1 India 2.11 2.74 China 0.46 0.82
2 Egypt 0.01 0.03 USA 0.17 0.20
3 Spain 0.02 0.02 Egypt 0.09 0.09
4 Netherlands 0.01 0.01 UK 0.06 0.07
5 Czechia 0.02 0.01 India 0.02 0.06
 Top 10 Major Exporting Countries Top 10 Major Importing Countries
Rank Previous FY Current FY Previous FY Current FY
Country Country
(2019-20)* (2020-21)* (P) (2019-20)* (2020-21)*(P)
6 USA 0.01 0.01 Pakistan 0.03 0.06
7 UK 0.01 0.01 Japan 0.03 0.03
8 Germany 0.00 0.01 Germany 0.02 0.03
9 Poland 0.00 0.01 Spain 0.03 0.03
10 Lithuania 0.01 0.00 Uzbekistan 0.02 0.02
Others 0.34 0.02 Others 0.81 0.18
World Total 2.53 2.86 World Total 1.73 1.60
Source: UN Comtrade (May 2021); HS codes used are 090931 and 090932; P: Provisional
*Data is not available as per financial year. It is provided as per Calendar Year (CY) (Jan-Dec);
Countries are arranged in descending order based on the data in the Current Year;
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

(In Lakh Tonnes)

Top 10 Major producing states in India
Rank States Previous FY (2019-20) Current FY (2020-21) (P)
1 Gujarat 3.20 3.32
2 Rajasthan 3.79 2.13
Others** 0.01 0.02
Total 7.00 5.47
Source: Spices Board of India; P: Provisional
**: The share of other states (except for top 2 states) in total domestic production is negligible. Gujarat
and Rajasthan together accounts for more than 90% of the domestic production.
States are arranged in descending order based on the data in the Current Year;
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

c. Major changes in the polices governing trade in the spot markets of the commodity (FY 2020-
21)

Date Major Policies Governing Trade and related Changes

14-Apr-20 The nation-wide lockdown amid outbreak of COVID-19 was extended till May 03, 2020
Despite the extension of lockdown, restrictions on certain agriculture related activities
15-Apr-20
were eased effective from Apr 20, 2020.
In addition to existing cess, the Govt. of Rajasthan imposed a 2% Krishak Kalyan Fee on
06-May-20 agricultural produce traded in mandis. In protest, mandis remained closed till May 14,
2020.
17-May-20 The nation-wide lockdown amid outbreak of COVID-19 was extended till May 31, 2020
Approval to three ordinances--amendment to the Essential Commodities Act, and two
05-Jun-20
central laws on inter-state trade of farm produce, and contract farming
The three farm bills that were passed in the Parliament during Sep 15 to 22, 2020
28-Sep-20 received Presidential Assent amid nationwide farmers’ protest, thus thus converting them
into Laws.
FSSAI has notified the Food Safety and Standards (Food Products Standards and Food
Additives) Eighth Amendment Regulations, 2020, related to microbiological requirements
13-Oct-20
for spices and herbs. Food Business Operators shall comply with all the provisions of
these regulations by July 1, 2021, says the notification.
FSSAI asked state food commissioners to conduct effective enforcement drive to check
29-Dec-20 adulteration in spices in wholesale markets/mandis under their jurisdictions in the wake of
media reports about sale of adulterated spices in the domestic market.
 Date Major Policies Governing Trade and related Changes
The Supreme Court stayed the implementation of the three Farm Acts 2020 and
11-Jan-21 constituted a four-member committee to make recommendations on the same. The panel
was given two months’ time to submit its report for a 'fair, equitable and just solution'.
Various states Govt. imposed local lockdown during the month of March 2021 amid second
Mar-21
wave of Covid, led to closure of physical markets.

d. Geo political issues in the commodity and its impact on Indian scenario (FY 2020-21)

Date Event Key Details Key Implications/Impact

Twenty army personnel were
killed during a violent
India-China border Trade relations with China got
17-Jun-20 confrontation with Chinese
tensions adversely affected.
troops in the Galwan Valley in
eastern Ladakh
2. Trading Parameters

a. Monthly and Annual traded volume (quantity in appropriate units)

Monthly Traded Volume

Month Traded volume (MT)
Apr-20 14,754
May-20 14,919
Jun-20 16,521
Jul-20 18,366
Aug-20 14,169
Sep-20 18,903
Oct-20 21,183
Nov-20 19,671
Dec-20 22,050
Jan-21 13,875
Feb-21 15,456
Mar-21 38,547
Yearly Traded Volume 228,414

b. Annual traded volume as proportion of total deliverable supply (quantity in appropriate

units)

Traded volume (MT) Deliverable supply( MT) Proportion

228,414 590,574 39.68%

c. Annual traded volume as proportion of total annual production (quantity in appropriate

units)

Traded volume (MT) Production( MT) Proportion

228,414 587,866 39.85%

d. Annual average Open interest as proportion of total production

Avg Open Int (MT) Production( MT) Proportion

2,728 587,866 0.46%

e. Annual average Open interest as proportion of total deliverable supply

Avg Open Int (MT) Deliverable supply( MT) Proportion

2,728 590,574 0.46%

f. Monthly and Annual value of trade (in Rs. Crores)

Monthly Traded Value

Month Traded Value(in Cr.)
20-Apr 251
20-May 202
20-Jun 228
20-Jul 258
20-Aug 201
20-Sep 263
20-Oct 297
 20-Nov 280
20-Dec 297
21-Jan 182
21-Feb 208
21-Mar 557
Yearly Value of Trade 3,178

g. Monthly and Annual quantity of delivery (in appropriate units)

Monthly Delivery Quantity

Month Total Delivery (MT)
Apr-20 75
May-20 18
Jun-20 114
Jul-20 102
Aug-20 387
Sep-20 333
Oct-20 174
Nov-20 63
Dec-20 324
Jan-21 1,065
Mar-21 705
Yearly Delivery Quantity 3,360

h. Monthly and Annual value of delivery (in Rs. Crores)

Monthly Delivery Value

Month Value in Cr
Apr-20 1
May-20 0
Jun-20 2
Jul-20 1
Aug-20 5
Sep-20 5
Oct-20 2
Nov-20 1
Dec-20 4
Jan-21 14
Mar-21 10
Yearly Delivery Value 46

i. Monthly and Annual Average Open Interest (OI) (in appropriate units)

Monthly Average OI
Month Avg Open Int (MT)
Apr-20 2,271
May-20 1,760
Jun-20 2,030
Jul-20 1,972
Aug-20 2,465
Sep-20 2,524
Oct-20 2,641
Nov-20 3,447
Dec-20 2,963
Jan-21 2,798
Feb-21 2,731
Mar-21 4,906
 Yearly Average OI 2,728

j. Annual average volume to open interest ratio

Volume to OI Ratio
0.34

k. Total number of unique members and clients who have traded during the financial year

Member Count Client Count

164 1789

l. Ratio of open interest by FPOs/farmers/Hedge/VCP positions to total open interest (Annual

average as well as maximum daily value)

VCPs/ Hedger
Annual Average 5.23%
Maximum Daily value 1.33%
*It is calculated on the day when commodity has highest open interest during the year.
*Commodity wise client categorization is as per category details as provided by the members.

m. Number of unique FPOs / farmers and VCPs/hedgers who traded in the financial year

Commodity Count
JEERAUNJHA 34
*Commodity wise client categorization is as per category details as provided by the members.

n. Algorithmic trading as percentage of total trading

Commodity %
JEERAUNJHA 8.57

o. Delivery defaults

NIL
3. Price movements

a. Comparison, correlation and ratio of standard deviation of Exchange futures price vis-à-vis
international futures price (wherever relevant comparable are available).
NA

b. Comparison, correlation and ratio of standard deviation of Exchange futures price vis-à-vis
international spot price (wherever relevant comparable are available) and domestic spot price
(exchange polled price).
NA

c. Correlation between exchange futures & domestic spot prices along with ratio of standard
deviation.

Correlation Standard Deviation

Futures Spot Mandi Futures Spot Mandi
Futures 1 Futures 1 0.508 1.257
Spot 0.411 1 Spot 1.969 1 2.476
Mandi 0.085 0.243 1 Mandi 0.795 0.404 1

Price Comparison
16,000

15,000
Price in Rs per Quintal

14,000

13,000

12,000

11,000

10,000
Apr-20 May-20 Jul-20 Aug-20 Oct-20 Dec-20 Jan-21 Mar-21

Futures Spot Mandi

d. Correlation between international futures & international spot prices along with ratio of standard
deviation (wherever relevant comparable are available).
NA

e. Comparison of Exchange polled price and mandi price (in case of agricultural commodities) /
other relevant price (in case non-agricultural commodities) at basis centre.

Correlation Standard Deviation

Futures Spot Mandi Futures Spot Mandi
Futures 1 Futures 1 0.508 1.257
Spot 0.411 1 Spot 1.969 1 2.476
Mandi 0.085 0.243 1 Mandi 0.795 0.404 1
f. Maximum & Minimum value of daily futures price volatility and spot price volatility along with
disclosure of methodology adopted for computing the volatility. (Volatility calculated by
Standard Deviation of daily returns for the period from 1 April 2020 to 31 March 2021)

Futures Price Spot Price

Volatility Month Value Month Value
Max Mar 0.013 Mar 0.007
Min June 0.008 Apr 0.002

g. Number of times the futures contract was in backwardation/contango by more than 4% for the
near month contract in the period under review

Contango 0
backwardation 5
4. Other Parameters

a. Qualitative and quantitative measure for Hedge effectiveness ratio (Methodology in Annexure I)
and basis Risk (Volatility of Basis) along with disclosure of methodology adopted for such
calculations. (Volatility calculated by Square root of Standard Deviation of daily returns for the
period from 1 April 2020 to 31 March 2021)

Basis Volatility 8.361

Hedge Efficiency 56.21%

b. Details about major physical markets of the commodity vis-à-vis market reach in terms of
availability of delivery centres (information to be provided state-wise and UT-wise).

Availability of NCDEX
State Major Physical Markets
Delivery center
Unjha Basis
Rajkot
Radhanpur
Gujarat
Tharad
Jamjodhpur
Morbi
Jodhpur ADC
Merta City (Nagaur)
Rajasthan
Nagaur
AnandpurKalu

c. Details about major physical markets of the commodity and average Open Interest for each month
generated from those regions.

Note – The OI for each month is classified based on the Member level. The Average OI is on
gross level (Long OI + Short OI)

State GUJARAT (in MT) RAJASTHAN (in MT)

20-Apr 1,654 860
20-May 1,126 658
20-Jun 1,120 644
20-Jul 1,066 661
20-Aug 1,143 685
20-Sep 1,224 703
20-Oct 1,514 879
20-Nov 2,154 1,170
20-Dec 1,667 829
21-Jan 1,671 762
21-Feb 1,685 774
21-Mar 2,383 853
"Note - The OI for CP is not mapped to any State/ location and hence not considered in the above data."
d. Details, such as number and target audience, of stakeholders’ awareness programs carried out by
the exchange.

Following is the list of Awareness program, Stakeholder engagement program exchange has conducted
for FY 2020-21. Due to the pandemic, all the programs were conducted on virtual platforms.

IEP/ RS Category Number of Participants

Investor Awareness Program All market participants 33
Investor Awareness Program All market participants 21
Investor Awareness Program All market participants 59
Investor Awareness Program All market participants 58
Investor Awareness Program All market participants 174
Investor Awareness Program All market participants 188
Investor Awareness Program All market participants 104
Investor Awareness Program All market participants 46
Investor Awareness Program All market participants 111
Investor Awareness Program All market participants 50
Investor Awareness Program All market participants 14
Investor Awareness Program All market participants 5
Investor Awareness Program All market participants 10
Investor Awareness Program All market participants 10
Investor Awareness Program All market participants 5
Investor Awareness Program All market participants 8
Investor Awareness Program All market participants 9
Investor Awareness Program All market participants 4
Investor Awareness Program All market participants 8
Investor Awareness Program All market participants 5
Investor Awareness Program All market participants 15
Investor Awareness Program All market participants 28
Investor Awareness Program All market participants 23
Investor Awareness Program All market participants 15
Investor Awareness Program All market participants 22
Investor Awareness Program All market participants 20
Investor Awareness Program All market participants 4
Investor Awareness Program All market participants 26
Investor Awareness Program All market participants 14

e. Steps taken / to be undertaken to improve hedging effectiveness of the contracts as well as to

improve the performance of illiquid contracts.

 Creating awareness about hedging and targeting the major Masala processors/ Traders/
Stockiest
 Awareness Programme in major trading centres as well as remote location
 One to one meeting with market participants and hedgers
ANNEXURE I

Qualitative and quantitative measure for Hedge effectiveness ratio

Hedging Efficiency Methodology

Regression analysis is carried out between near month futures returns and NCDEX polled spot prices
returns of the FY2020-21.

The R-Square value of the Regression analysis represents the “Hedging Efficiency”.

Note: -

Date for which spot prices were not available is not used for analysis.

Weekly returns are used for performing Regression Analysis.

The method used to calculate Hedging Efficiency does not consider liquidity risk because of this
reason illiquid commodities can have high hedging efficiency.

References:

Ghosh, Ph.D, Nilanjan & Dey, Debojyoti & Moulvi, Nazir & Jain, Niteen & Sinha, Neha & Rachuri,
Sarika. (2013). Hedging Efficiency—Measures and Empirical Study.