Turmeric prices have dropped from the highs of nearly ₹20,000 a quintal a few weeks ago in the futures market but they are likely to rise again later this year, traders and analysts say.

“Prices (in the futures market) have dropped 10-15 per cent to levels of ₹16,500-17,000 currently after having increased to nearly ₹20,000 a quintal. The downside may be limited not below ₹15,000. But prices will likely gain after July,” said Ankit Agarwal, Director at Erode-based Amar Agarwal Foods India Ltd.

On the NCDEX, turmeric futures for delivery in June gained ₹398 on Wednesday to end at ₹17,516. 

“We expect prices to drop a bit further before stabilising. Probably, after September we can see some movement,” said Sunil Patil, proprietor of Sangli-based Vardalaxmi Trading company. 

Lower crop

According to Biplab Sarma, Senior Research Analyst, AgriWatch, 5,400 bags (50 kg) of new arrivals were reported at Nanded spot market on Tuesday and they traded at the price bracket of ₹15,000-17,500 a quintal. New crop supply of 10,500 bags were reported at Nizamabad with a 10-15 per cent moisture and in Erode, 18,500 bags of new arrivals were reported. They were over 25 per cent higher compared with the previous week, he said. 

“Prices gained as the crop was lower this year. Crop has arrived in parts of Tamil Nadu, Telangana and Andhra Pradesh,” said Nizamabad-based trader Amrutlal Kataria. 

As anticipated by AgriWatch, the current year is witnessing price support as a consequence of the reduced production, said Sarma.

There has been at least a 20 per cent drop in production in Tamil Nadu, Telangana and Maharashtra — the 3 main producers — pushing up prices to record highs, Agarwal said. 

According to the Ministry of Agriculture and Farmers’ Welfare’s first advance estimate, turmeric production in 2023-24 is estimated at 10.74 lakh tonnes against 11.30 lakh tonnes the previous year.

Export demand

He said new arrivals are expected from the Marathwada region in Maharashtra and it could keep prices on leash. “Also, there has been demand destruction with many going hand-to-mouth as prices surged. This is one of the reasons for prices to decline,” he said.

Export demand, however, is steady, said Patil and Agarwal.

However, Sarma said turmeric exports in January were 14,490.09 tonnes, down 2.17 per cent from December due to high prices. Total exports during January-December were reported to be around 2.24 lakh tonnes, up by 6.68 per cent compared with the same period in 2022.

 Patil said many stockists hedged their position and have gained due to this. “Demand, however, has slowed in view of high prices,” he said.

Patil and Agarwal said turmeric prices could stabilise in the ₹15,000-16,000 region during April-May before heading in the direction of the demand-supply balance. 

“Overall, the scenario is bullish in the later part of the year,” Agarwal said, adding that demand currently is slack as the Ramadan month is getting over.

Higher crop next season

Agriwatch’s Sarma said  prices are likely to increase further due to lower 2024 ending stocks, which will impact the stock to use ratio. “In 2023, it was 10.49 per cent and AgriWatch expects it will be around 5.83 in 2024,” he said.

The next season could witness at least a 30 per cent increase in the area under the crop, Patil said. “With La Nina being forecast, rains could be good and farmers will be encouraged by this year’s price,” he said. 

Sarma said turmeric growing regions such as Sangli, Basmat, Hingoli are witnessing a good demand for quality on expectations of increase in sowing area current year.  

He said traders are holding stocks for sowing, expected to begin in the middle of May depending on the weather. “Currently, turmeric quality seeds are reported around ₹4,000-4,500 a quintal against ₹1,500-1,700 last year,” Sarma said.

Patil said seeds were quoted at prices upwards of ₹3,500 a quintal in Sangli and nearby areas.