The Hindu Business Line : Downtrend in turmeric futures due to rise in output

Mumbai, Oct 22 Turmeric futures are on a downtrend in the short term on the backdrop of increase in production of 8.90 lakh tonnes in 2006-07 against 8.5 lt last year.

The domestic demand has remained almost stagnant at seven lt, while exports were between 40,000 to 44,000 tonnes.

On Thursday, turmeric for October delivery hit the lower circuit at Rs 1,805 per quintal, while the November delivery was down 1.5 per cent at Rs 1,999.

“Though heavy selling was witnessed in the October contract as it nears delivery period, the pull back in November contract clearly reflects bearish sentiments,” said Mr Sushil Sinha, Regional Head, Karvy Comtrade.

In the last three months, turmeric prices have fallen to the current level from a peak of Rs 2,300 per quintal due to high speculative selling, he added.

Carry forward stocks

The high carry forward stocks of about six lakh bags (70 kg) are also pulling down the price. Warehouses are full with around 22 lakh bags, including last years carry forward stocks.

Inspite of a decline in the cultivation acreage by 10 per cent in 2007-08, marketmen expect production to be on par with last year due to favourable weather.

“Domestic buyers are away from the market expecting a further fall in price. Lack of domestic demand supports bearish trend in near term,” Mr Sinha said.

Inventories for 2007-08, are expected to double to over one lakh tonnes.

As of now, spot market prices are at Rs 1,980-2,000 levels a quintal.

“Prices are expected to come down and the supports are seen at Rs 1,970 level. If market clears the support we may see prices to come down towards Rs 1,910-1,900 levels. Likewise the resistances can be seen at Rs 2,050 levels. If it breaches this, we might see a short-term trend reversal,” Mr Sinha said.