Turmeric Gets An Edge, But May See Correction

MUMBAI: Turmeric futures prices on commodity exchange NCDEX, which touched a record high of Rs 2,850 per quintal on Wednesday, are set for correction in the short-term on expectations of selling pressure in the market, traders and analysts said.

“At present, prices are trading at pretty high levels. Prices may see some correction in the short-term and are projected to trade on negative note on account of selling pressure in the market,” Karvy Comtrade analyst Veeresh Hiremath said.

Prices have gone up from Rs 2,600 per 100 kg to Rs 2,850 in December. The most active April 2008 contract edged up by Rs 732 from Rs 2,118 per 100 kg since the beginning of the contract to Rs 2,850 on Wednesday.
A bullish trend was also witnessed in the physical market. Spot turmeric prices rose by Rs 35 to Rs 2,687.80 per 100 kg on Wednesday.

The demand from exporters coupled with the estimated 15% decline in turmeric production in 2007-08 are affecting the prices, traders said, adding that farmers in some regions have opted for crops like soyabean, chilli and maize over turmeric.

Many farmers are growing short duration crops instead of turmeric which is a nine-month crop.

“I am growing chilli this time because it is cultivated in a relatively shorter duration and gives better returns than turmeric which is a nine-month crop,” Warangal-based farmer Sriramulu said. Further, recent reports suggesting pest attacks on crops in Nizamabad and Warangal could lead to a further fall in output.

On an average, India produces about 9 lakh tonnes of turmeric per annum and has domestic demand of 7.5 lakh tonnes. The commodity is mainly grown in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Orissa, West Bengal, Gujarat, Meghalaya and Maharashtra, among others.

However, warehouses have huge stock of nearly 18 lakh bags (70 kg each bag). With fresh arrivals expected in February, traders will offload their old stock between December and January. “This may put pressure on prices,” Hiremath said.
India is the largest producer, consumer and exporter of turmeric and contributes about 78% of the global production and 60% to the total global exports.