Low carryover, speculation fuel turmeric prices to record levels

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Kochi: Turmeric prices in the spot markets have reached record levels in the last few days because of dwindling carryover stocks and increased speculative activities. Traders said prices have more than doubled in a span of just a year also owing to extensive damage to the standing crop. Spot prices at Erode market ( the largest wholesale market for turmeric) have increased by Rs 10 per kg in three days after Diwali to touch Rs 95.

While some traders feel that the prices would cross Rs 100 per kg on fundamentals, another section firmly believes that the market is driven by pure speculation and it would plummet once estimates of new crop arrive by November-end.

“The current stocks are insufficient to meet demand and this should keep markets firm in the near-term,” Nalini Rao, a research analyst at Angel Commodities Broking told FE. Stock level for the spice at the major trading and producing centres is around 0.77 –0.8 million bags (70 kg per bag) as against 1.38–1.4 million bags during the year-ago period. Domestic demand from grinders and traders is expected to gain momentum during the days ahead. Sellers at the cash market are not willing to release the stock in anticipation of better returns, sources said.

Karvy Comtrade reports that the bullish trend in turmeric started with the downfall in production, from 52 lakh bags in 2007-08 to 42 lakh bags this year. As India is the largest producer and exporter of the commodity across the globe, any shortfall here is enough to trigger the sentiments throughout the world, sources said. India produces around 78% of the total global output. Other major producers are China (8%), Myanmar (4%), Nigeria (3%) and Bangladesh (3%).

Exports of turmeric from India during 2008-09 was an all-time high both in volume and value. The country exported 52,500 tonne valued at Rs 248.58 crore as against 49,250 tonne valued at Rs 157.00 crore the previous year. Major buyers were the UAE (5,910 tonne), Iran (5,335 tonne), Bangladesh (4,595 tonne), Malaysia (4,825 tonne) and Japan (3,090 tonne). India is the largest supplier of turmeric in the world market. Other major suppliers are Vietnam,

Indonesia, Myanmar and China. It is reported that the medicinal and cosmetic use of turmeric is increasing significantly over the years.