Turmeric prices have increased by ₹1,000 a quintal over the past month but traders blame speculation in the futures market for the rise in the rates.

“Turmeric prices have increased not because of any fundamentals but mere speculation. Some speculators raised the bogey of rains damaging stocks in Maharashtra and pushed up prices,” said Amtrutlal Kataria, a trader from Nizamabad, Telangana.

“Rains in Maharashtra affected arrivals at agricultural produce marketing committee (APMC) yards. Speculators used the opportunity to push up prices in the futures market,” said Poonam Chand Gupta, another trader from Nizamabad.

“Speculators used the rains in Maharashtra as one of the reasons to hike turmeric prices. The other reason is fear of a lower acreage in the coming season. They used the opportunity to consolidate the prices over a period of 8-10 days,” said Sunil Patil, proprietor, Varadlaxmi Trading Company, Sangli, in Maharashtra.

The rise in prices has led to only buying in the futures market and no selling, he said. 

Spot, futures difference

“Demand for turmeric is normal but fears of farmers lowering the area under the crop have pushed up prices,” said RKV Ravishankar, President, Erode Turmeric Merchants Association in Tamil Nadu. 

“You can understand the role of speculation in pushing up turmeric prices from the difference between spot and futures price,” said Gupta. 

According to data from Agmarknet, a unit of the Agriculture Ministry, the modal price (the rate at which most trades take place) of superior finger variety turmeric has increased from ₹5,505 a quintal to ₹6,889 currently at Nizamabad APMC. 

On the National Commodities and Derivatives Exchange (NCDEX), turmeric (farmer polished) decreased over 3 per cent on Thursday to ₹8,492 a quintal  for the contract expiring on June 20. NCDEX spot prices for Nizamabad are quoted at ₹7,669.75.

Investing jeera gains

“Whatever speculators gained in jeera (cumin) futures, they have invested in turmeric futures now,” said Patil. Cumin futures have soared over the last six months to zoom to over ₹48,000 a quintal 10 days ago. 

He said farmers are unlikely to switch over from turmeric as they did not have many options. “Farmers in regions such as Nanded have got over ₹7,000 a quintal. They may go for turmeric again,” he said. 

“We expect prices to drop by this weekend or earlier next week,” said Kataria.

“Stockists have also entered the market to build inventories. This is sustaining the futures market,” said Ravishankar. 

‘Wait and watch’

Export demand is normal with traders adopting a “wait and watch” policy, he said. Gupta concurred with his views, while Kataria said shipments have been rising 5-7 per cent annually.

“Exports are up, though demand is a little slack currently,” Patil said. 

According to the Spices Board India, turmeric exports increased 10 per cent during April-February of the 2022-23 fiscal to 1.51 lakh tonnes from 1.37 lakh tonnes in the same period of 2021-22. 

As per the Agriculture Minister’s first advance estimate of horticulture crops, turmeric production is estimated higher at 11.76 lakh tonnes during the current crop year to June against 11.24 lakh tonnes last crop year.