Total production of the commodity is estimated to decline because of lower acreage and damage to the crop. However, the large carryover stock with traders and farmers would cap a rally in the market.
India is the largest turmeric producer accounting for 75-80% of global production, and demand for the commodity has been increasing rapidly from the medicinal and cosmetic industry.
N Raveendran, national consultant, National Agricultural Innovation Project (NAIP), told FE that the new crop would be lower due to lesser area and damage due to lower irrigation.
But the impact of the lower production will be known only after March when the new production estimates are known. As the carryover stock is very large, the impact could be low, he said.
Raveendran feels that any stock above 80 lakh bags in March would not lead to a huge increase in the price of the commodity. Yield would be lower in Tamil Nadu as canals are almost dry and the power situation very bad, he added.
The new crop would be lower by 40-50% and the market is likely to remain steady as farmers hold on to the stock. I expect the market to move up only after July 2013, RK Viswanathan of Erode Turmeric Merchants Association said.
Kotak Commodities report that prices are expected to trade with a positive bias during the session on strong fundamentals.
Lower production of turmeric and increased domestic and overseas demand could trigger fresh buying at lower levels.
According to Vedika Narvekar, senior research analyst for agro- commodities at Angel Broking, production for the next crop season of 2012-13 would be 50 lakh bags when compared with 90 lakh bags in 2011-12.
Prices have corrected over the last few days on higher stocks. The new crop is trickling in from Karnataka. We dont see a major down side as we expect the traders to buy at lower level for the domestic and export market, she added.
The spot market for the commodity is currently trading in the range of R5,400-R5,600 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 extractors and grinders.