Informist, Wednesday, Sep 11, 2024

By Pallavi Singhal

NEW DELHI – Prices of turmeric, which have been sliding for the past few months, could rise almost 10% by the first week of November due to lower stocks, rising festival season demand, and reports of damage to the crop, traders and analysts say.

Turmeric futures touched a high of 20,430 rupees per 100 kg on May 27, before falling to 15,000 rupees per 100 kg in July and 13,000 rupees in the last week of August. Analysts attributed the decline to a drop in export demand from Bangladesh, as well as profit-booking.

"We expect the prices to rise and reach the upper band of 15,500-16,000 rupees by the first week of November," said Ravi Shankar Pandey, commodity analyst at SMC Global Securities.

Prices will continue to rally even after November, according to Biplab Sarma, senior research analyst at AgriWatch. "Prices are unlikely to sustain at current levels and will rise even further, to go up to 17,000-18,000 rupees per 100 kg from November. The rise will be gradual, not steep," he said.

Such a trend in prices is already visible. On the NCDEX, the most active October contract of turmeric has risen over 3% to 14,100 rupees per 100 kg in a week. In the benchmark market of Nizamabad in Telangana, the commodity was quoted at 14,000 rupees per 100 kg today.

"There are tighter pipeline stocks going ahead. Overall, stocks are estimated to be down almost 25% on year due to lower production last season. Further, reports of crop damage in Andhra Pradesh and prediction of heavy rainfall for Maharashtra, which may damage crops, are supporting market sentiment," Pandey said.

Telangana, Maharashtra, Andhra Pradesh, and Tamil Nadu are major producers of the crop. According to a preliminary report by Andhra Pradesh's horticulture department, the turmeric crop has already suffered damage, with more than 3,100 ha affected by heavy rainfall and floods.

More than 4,700 turmeric farmers have been affected so far, the data showed. As of today, the area under turmeric in the state is 15,482 ha. Last year, the crop was sown over 33,283 ha in the state, Informist had reported on Sep 3.

In Telangana, rainfall has been 41% more than normal so far. Maharashtra's Marathwada has also reported crop loss due to heavy rainfall in the past few days. "Turmeric is an underground crop and any waterlogging for more than six days can be harmful," Agriwatch's Sarma said. According to Spices Board of India, turmeric production in the 2023-24 crop year (Jul-Jun) is estimated at 1.07 mln tn, down 5% from the previous year.

"It was because of lower output that carry-forward stocks were down by 10% this year. We anticipate the closing stocks to be even lower, at 300,000 tn, down 25%. Stocks for the upcoming year will depend on how the weather goes this month," Pandey said.

The strain on turmeric reserves can be seen from lower arrivals of the commodity at spot markets. "Arrivals have fallen by almost 50% in the past week. We are running hand to mouth," said Ravi Karani, chief executive officer of Karani Spices in Warangal. "There are stocks for only up to December, we assess. People have already started taking long positions in the market. The market is currently consolidating, but the sentiment is bullish."

The pressure can also be gauged from import-export numbers – while India's turmeric imports rose, exports of the commodity fell. Turmeric imports in Jan-Jun were higher by 241% at 14,708.14 tn, while exports of the spice during the same period fell 16% to 87,345.48 tn, according to data from the commerce ministry.

Turmeric is sown around April-end and harvested between January and March, with arrivals peaking between February and April. With the domestic crop still six months away and stocks already under pressure, prices can only go higher. End

Edited by Avishek Dutta

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