Turmeric slips on low offtake, fresh arrivals
Sun, February 07, 2010
After moving 177 per cent northwards last year, the prices of tur meric dipped more than 6 per cent year-to-date. Primarily, the spice is used in the kitchen and in industries for flavouring food items, dyeing, cosmetics and medicines.
Normally, the usage of turmeric in domestic markets is in the range of 2.50 to 2.60 lakh bags per month (one bag = 70 kg). Export figures of this yellow spice accounts for over 6 to 7 lakh bags on an annual basis, while the rest is used for re-sowing and carry-forwarding. Since the past couple of days, turmeric prices traded sideways to an up manner. At present, prices are witnessing some softness due to lower offtake and improved arrivals. Prices at the major spot markets traded in range of Rs.10,200 to Rs.11,000 per quintal. Spot prices for the short term (15-20 days) may not witness a sharp fall due to the lower availability of turmeric until fresh arrivals come in good quantity.
New crop arrivals have started at Nizamabad-Erode mandi at around 1,000-1,500 bags daily, while Sangli has also seen around 300-500 bags per day. Ajitesh Mullick, head of agri-research at Religare, said, “The price of turmeric will be corrected more in the coming months as fresh arrivals have started to enter the market. The arrivals are likely to gain momentum in the coming weeks. This can pressurise prices in the short term.” It is expected that the production figures of turmeric will improve this year because the farmers can switch to this crop because the return from turmeric was impressive last year. According to traders’ estimates, turmeric production in India for the crop year 2010 will remain in between 46-50 lakh bags, against 37-38 lakh bags last year. However, opening stock is estimated to be lower for the 2010 new season at around 3 lakh bags, against 9 lakh bags at the opening season in 2009.
As per the latest reports from the Spice Board of India, Indian exports of turmeric fell to 40,000 tons during April-December 2009 from 41,425 tons in the same period in the previous year. However as per estimates, India’s export as well domestic demand for turmeric remains between 52-53 lakh bags for 2010. So if one would add around 3 lakh bags as opening stock with 48-50 lakh bags as production, then also it will be tight situation for the rest 2010 year. We might open with very negligible stock for the next season that begins in 2011.
“For the short term, with increase in arrivals, prices might remain under pressure for some time but again this would depend on how sharply arrivals increase. If in peak season also, arrivals fail to increase sharply, then despite the arrivals season, we might see a sharp jump in prices” said Vibhu Ratandhara, assistant vice-president at Bonanza Commodity Broker. “Secondly, it also depends on stockist activity and export demand. If good export demand is seen, then stockists will be active during the peak arrivals season to corner quality crop for future exports, which will provide support to prices” Ratandhara added.
However, the long-term scenario might remain firm due to strong fundamentals such as mismatch in production and consumption figures. On Friday, turmeric spot prices at NCDEX was traded at Rs.1,0149.05 per quintal, down 1 per cent from its previous close.
Source: MyDigitalFC.
