Commodities

Export demand, monsoon hold the key to turmeric prices

NAVEEN MATHUR | Updated on January 20, 2018 Published on June 07, 2016

BL08-TURMERIC

Overseas shipments up 10.5% in first four months of 2016

After touching a five-year high in January 2016, turmeric prices slipped about 20 per cent in the same month and are yet to recover due to abundant supplies.

In January, turmeric futures traded on the National Commodities and Derivative Exchange (NCDEX) fell from the monthly high of ₹10,166 per quintal to ₹8,200 levels.

Turmeric prices have been under pressure since the start of 2016 due to the arrival of the new crop. Despite the weather disturbances and reports of lower production, prices followed the seasonal trend.

During the growing season until December 2015, prices remained high in anticipation of low production due to the dryness during the sowing season and excessive rains prior to harvesting in Tamil Nadu and Andhra Pradesh. Then, prices started to fall in January in anticipation of better arrivals but reversed direction in February on good demand for quality turmeric from industrial buyers and stockists.

During March-May, which is the peak arrival season, prices tend to consolidate or rise depending on export and upcountry demand and continue to move up post May as arrivals start to decline.

Turmeric is widely grown in the peninsula. Andhra Pradesh, Telangana, Tamil Nadu and Karnataka are the major turmeric producing States contributing nearly 70 per cent of the total production, followed by Maharashtra, Odisha, West Bengal and Kerala.

Higher arrival

According to the Agmarknet data, the quantity of turmeric arrivals during February-May in key states was higher by 71 per cent compared to the last season.

Higher arrivals in 2015-16 were thanks to the good prices and higher production, according to trade sources. For this season, production of the yellow spice is forecast to increase to 8 lakh tonnes (lt) from 7.50 lt last year.

Fall in exports

In FY 2015-16, turmeric exports were lower by 5.9 per cent at 85,426 tonnes compared to 90,738 tonnes last year, according to data from the Department of Commerce. However, due to quality supplies and a continuous drop in local prices, exports in the first four months of 2016 were up 10.5 per cent to 29,807 tonnes against previous year’s 26, 974 tonnes.

Outlook

Turmeric demand from traders and stockists will pick up in coming months as exports gather pace during June-July.

Thus, we expect a steady rise in turmeric prices in the coming months and can touch ₹8,500 per quintal (CMP: ₹8,000) thanks to higher export demand coupled with forecast of excess rainfall in turmeric growing regions in the peninsula.

A clear picture of the actual progress of the monsoon and sowing will drive turmeric prices.

The writer is Associate Director – Commodities & Currencies Business, Equity Research & Advisory, Angel Broking. Views are personal.

Published on June 07, 2016
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