Turmeric has been heating up in the last couple of weeks. An increase in arrivals of better quality turmeric has triggered strong buying interest in the spot market. The arrivals are pushing the stockists to buy in large quantity, aiding prices. The demand from North India is also expected to pick up strongly, on the back of the good quality supplies.

Heightened spot market demand has also helped move the turmeric futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) higher. The NCDEX contract has surged over 13 per cent from its recent low of ₹7,254 per quintal recorded on September 23 to a high of ₹8,220 on Wednesday last week. The contract is currently trading at ₹7,946.

Though prices have retreated from highs, the overall outlook for turmeric is bullish on the charts. The presence of key supports could limit the downside for the contract. There is a strong probability for futures to move higher in coming sessions.

Prior to the recent rally, turmeric price had tumbled over 18 per cent in the past month.

The NCDEX contract recorded a high of ₹8,872 on September 1 and tumbled from there to a low of ₹7,254 towards the end of the month. Weak demand due to medium and poor quality arrivals in the spot market was the major factor that pulled the price sharply lower. There were no fresh orders from North India, which added to downside pressure on prices.

Medium-term view The medium-term outlook is bullish. The strong downtrend that had begun from the January high of ₹9,680 found a bottom at ₹6,612 in the last week of July.

The subsequent rally from this low breaching a key resistance at ₹8,000 signals a trend reversal.

Although the contract fell back after recording a high of ₹8,872 in September, this move was capped. Technically, the 21 and 55-week moving averages around ₹7,500 provided support to the contract and halted the fall. The strong reversal thereafter from the low of ₹7,254 suggests that the preceding down move was temporary.

The level of ₹7,500 is a key medium-term support for the contract. There is limited threat of a sharp fall as long as the contract trades above this level.

A rally to ₹8,900 — the next important resistance level — looks likely in the coming weeks. A further break above this hurdle can take the contract higher to ₹9,200. The medium-term outlook will turn negative only if the contract records a strong break and a decisive close below ₹7,500. Such a break can take the contract lower to ₹7,200 and ₹7,000 thereafter.

Short-term view The recent 9 per cent rally from the low of ₹7,254 to ₹7,946 signals the reversal of the downtrend that was in place since early September. Several indicators on the charts confirm the trend reversal.

The contract is currently receiving support from its 200-day moving average at ₹7,935.

The next key short-term support is at ₹7,800.The contract can now rise to ₹8,450 and ₹8,550 in the short term.

Any intermediate pullback move in the near term can find support in the ₹7,950-₹7,800 zone. The outlook will turn negative if the contract declines below ₹7,800.

The ensuing targets on such a fall will be ₹7,650 and ₹7,500.

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