For the first time in the history, turmeric prices crossed Rs 4,000 per quintal in the second half of June this year. As on Friday, price of turmeric stood at Rs 4,000-4,100 per quintal, for both finger and bulb varieties, in the Erode spot market in Tamil Nadu, the largest market for the commodity in the country.
In fact, the 2007-08 season witnessed bumper harvest. Despite this, the price of the commodity increased mainly due to speculative buying in the futures market, trade sources added. Further volatility in the stock market has forced a sizeable part of investors to pump in their funds into commodity futures trading, turmeric in particular as it is non-perishable commodity, fueling the turmeric prices to roof.
Turmeric price that stood in the range of Rs 2,500 before diwali festival in 2007 started moving from November and hovered in the range of Rs 3,000-Rs 3,500 in January-April 2008. From May 15, the prices started surging at alarming levels, said NK Viswanathan, ex-secretary of Erode Turmeric Merchants Association who is also a top turmeric trader in the country.
Lured by higher prices, Viswanathan said farmers were switching back to turmeric cultivation this season across the country. Water is not a problem this season for turmeric cultivation, he said.
With the reservoirs in turmeric growing areas already filled with adequate water, he said Indian Metrological department has given positive outlook on Southwest monsoon. The turmeric sowing will increase by 15-20% across the country this season, he added.
In the last three years, the farmers have reduced the acreage under turmeric cultivation and switched over to other gainful crops like sugarcane. Citing various statistics, Viswanathan said the country witnessed 46 lakh bags (75-kg per bag) of turmeric production in the 2007-08 season that started in January this year with a carry forward stock of 7 lakh bags. Of the total availability of 53 lakh bags, around 28 lakh bags were sold out as on June end while the traders hoarding the remaining 25 lakh bags, are escalating the prices.
As annual consumption of India stood at 47 lakh bags, the market expect that another 19 lakh bags would be sold in the next six months till the beginning of the next harvest in January 2009.
With more farmers raising turmeric this Kharif, he said the output in 2008-09 would increase to above 50 lakh bags along with 6 lakh bags of carry over stock. If the market sensed this scenario, the prices may fall down in October this year.
However, sources in brokerage firms said that prices may not fall immediately as it would be supported by increasing exports in the recent years. Infact, the turmeric exports increased by 59% to 51,500 tonne in 2006-07 from 32,402 tonne in 2002-03.