Turmeric hits 5-year high on crop damage

Turmeric prices have surged to a five-year high amid crop damage concerns and demand prospects. From February 1, April futures have increased nearly 25 per cent to ₹7,990 a quintal on NCDEX. Spot prices have moved up 19 per cent in Nizamabad, Andhra Pradesh, with modal prices (rates at which most trades take place) to ₹6,750 a quintal on Monday.

Quality turmeric fetched as much as ₹7,911 a quintal in Nizamabad.

Crop projection

Trader sources attributed the rise in prices to factors such as crop damage in growing regions, but they also suspected speculative factors pushing up prices. Turmeric crop for the year was projected to be around 98 lakh bags (each of 60 kg) but rains during October 2020 caused flooding and higher moisture leading to 10-15 per cent of the crops Telangana, Karnataka and parts of Maharashtra being affected. Arrivals have started in key markets such as Nizamabad and Erode.

Kolkata-based spices trader and analyst Premchand Motta said that the novel Coronavirus (Covid-19) pandemic fuelled domestic consumption of the spice as an immunity booster. “Due to Covid-19, we’ve seen turmeric consumption rising by five lakh bags each in domestic and overseas markets. As a result, we have about 20-22 lakh bags of old stocks or carryover. Further, as against the fears of widescale damage to the crop in the growing regions, we expect the crop loss will be limited to 10-15 per cent and we expect the crop size to be about 89-90 lakh bags against the expectations of 97-98 lakh bags,” said Motta.

The sentiment around shortage and overseas demand further fuelled the futures market, where the prices rallied much faster in the past fortnight. “The upside in prices was expected but not to such an extent,” Motta added.

Quoting the Spices Board data, Geojit Financial Services Limited (GFSL) said that India’s turmeric exports during April-September 2020 increased by 42 per cent to 99,000 tonnes compared with the year-ago period. For the full year, India’s turmeric exports during 2019-20 was 1,36,000 tonnes.

“Turmeric prices in the futures market have increased by about 12 per cent in past one week and about 25 per cent since February 1. This is primarily because of higher export demand and tight supply conditions due to climatic adversity in growing regions of Telangana. The supply pipeline is almost empty as turmeric was in high demand during 2020 for immunity booster. This will keep prices firm in near term,” Ajay Kedia, Director of Mumbai-based Kedia Commodity told Businessline . According to Kedia, demand for turmeric from Gulf countries, Malaysia, Singapore and other European countries has increased by 40 per cent in the recent past. “The increase in the demand is also seen due to upcoming ramadan period and marriage seasons,” said Kedia adding that since the supply side is constrained, there is less likelihood of a correction in the prices from the current levels.

Lower arrivals

Arrivals in the spot markets has been lower. At Erode market in Tamil Nadu, turmeric arrivals were reported at 655.95 tonnes during February 1-15 against 668.68 tonnes for same period last year as per Agmarknet data. Nizamabad market saw Turmeric arrivals at 4,714.80 tonnes as against 6,409.80 tonnes last year. Experts see prices to get a support at around ₹7,000 and may rise again following overseas and domestic demand. Notably, for past two-three years, turmeric has been an underperformer compared with other agri-commodities.

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