Early in April when turmeric prices crashed to below Rs 3,500 a quintal, few would have expected the commodity to rebound so fast. Barring a few stockists who began building inventories, most traders wouldn’t want to even go near it.
From there to now when the National Commodities and Derivatives Exchange has barred fresh position in August contracts, turmeric has travelled double the distance.
The main reason for turmeric to head North since April-end is scanty rain in growing areas of Tamil Nadu, Karnataka and Andhra Pradesh. Though subsequently, Karnataka and Andhra Pradesh growing areas have received ample rainfall, Tamil Nadu growing areas are still rain-deficient.
The other bullish factor has been fears of lower acreage in view of farmers shifting to other crop as they got low prices for this year’s crop. A bonus factor for turmeric now is demand from Pakistan. Some traders in Punjab have got orders from the neighbouring country and it is acting as a driving factor.
However, the NCDEX move to bar fresh positions has acted as a dampener. Fears over the Forward Markets Commission barring new contracts or the Government coming up with measures such as higher margin money to take positions in turmeric futures could be deterrents in turmeric’s upward move.
But this is a commodity that has found its direction from the spot market. Hence, prices could begin to seek higher levels again once export enquiries are converted into orders.