Big carryover stocks prevent turmeric price increase

Written by RajeshRavi | Kochi | Updated: Sep 25 2012, 07:27am hrs
Huge carryover stocks are preventing an upside in the turmeric market despite reports that the next crop would be 35-40% lower from last year. Lower returns from the commodity in the recent past has prevented farmers in most the region to sow lesser area. India is the largest turmeric producer with 78 % of the global production and demand increasing rapidly from the medicinal and cosmetic industry.

Production for the next season would be just half of the current years production. But the market has huge volume of carryover stocks that would prevent a rally. I expect the market to move up only after 2013 July, RK Viswanathan of Erode Turmeric Merchants Association said.

According to Vedika Narvekar, senior research analyst for agro- commodities at Angel Broking. The production for the next crop season of 2012-13 would be 50 lakh bags when compared with 90 lakh bags in 2011-12. Sowing is lower by 18-20% in Andhra Pradesh and overall it would be lower by 30%. Rains were erratic and lower in the initial phase but recovered during last month, she added. She estimates the carryover stock in the market to be about 30-35 lakh bags. Vedika expects the export market to recover in the coming months.

Tamil Nadu Agricultural University (TNAU) reports that Indias domestic consumption and export demand requires 65-75 lakh bags of turmeric. Turmeric prices fell 80 % from record high of R16,350 per quintal in November 2010 and touched a low of R3,360 per quintal. Very high returns from turmeric prompted farmers to switch from cotton, tapioca and soya in many places.

The spot market for the commodity is currently trading around the range of R5,500-5,700 per quintal. During the last FY, exports stood at 79,500 tonne, which is higher by 61 % in volume when compared with FY 2010-11. Indian turmeric has the highest curcumin content and is preferred by the extractors and grinders.

Fayaz Hudani, analyst from Kotak commodities told FE that the next crop would be lower by 20% at 10 lakh tonne compared to 12 lakh tonne of 2011-12.

He expects the market to remain weak due to sluggish demand from both the domestic and export market.