The Hindu Business Line : Turmeric futures set for downward correction

Mumbai, Dec. 9 After hitting an all-time high of Rs 2,733 per quintal, turmeric futures on NCDEX is set for a downward correction in the short term. Prices have firmed from Rs 2,278 per quintal to Rs 2,700 in October.

However, turmeric in the last one week has lost nearly 4 per cent to Rs 2,598 per quintal. Prices have surged up nearly 19 per cent in November and touched a new high of Rs 2,733.

Domestic Demand

In 2007-08, the acreage under turmeric cultivation decreased by 15-20 per cent compared with last year’s 1.89-lakh hectares. Despite lower acreage, the production is expected to be on par with last year’s output of 8.9-lakh tonnes due to high productivity, according to traders.

India is the largest producer, consumer and exporter of turmeric and contributes about 78 per cent of the global production and 60 per cent to the total global exports. On an average, India produces about 9 lakh tonnes of turmeric per annum and has domestic demand of 7.5 lakh tonnes. The export demand is about 51,000 tonnes.

“Timely commencement of monsoon and favourable weather condition during crucial bulb formation stage are believed to have contributed to higher yield this year,” said Mr Giri Prasad, a trader in Andhra Pradesh.

Panic Situation

A carry forward stock of about one lakh tonnes, which is double the quantity of last year, is likely to bring prices down. Warehouses have a stock of 20 lakh bags (70 kg each bag), including last year’s carry forward stocks.

“With fresh arrivals expected in February, traders will offload their old stock between December and January. This factor will create panic situation in the market and may put pressure on prices,” said Mr Harish Galipalli, Head of Research, Karvy Commodities.

“We recommend selling around Rs 2,605-15 targeting Rs 2,535-40 and then Rs 2,500 with stop loss above Rs 2,660 levels,” he added.