Good exports demand for turmeric amidst dwindling stocks has once again started pushing up prices. Turmeric prices, which had touched record highs this year, eased a bit over fears that the existing carryover stocks might not be sufficient enough to meet the demand before new crop starts coming into the market in early 2011.
However, some traders feel that excessive speculation in the exchanges, entry of new players in trading and hoarding due to high returns from turmeric could harm the trade. ?The market sentiments are bullish due to excessive and harmful speculation. High returns from turmeric have prompted many to join the trade in hope of making fast cash,? RK Viswanathan of Erode Turmeric Merchants Association said. Prices tend to move on sentiments rather than real demand, he added.
More stocks are coming into the market with farmers releasing stocks, which were hoarded to make profits, he added. Reports that the sowing area has increased and the monsoon is timely and normal have prompted them to sell, he said.
The stocks are very low compared with the previous year. Against 17-18 lakh bags during the same period of 2009, the actual stocks in the market at present is less than 13 lakh bags, Sudha Acharya at Kotak Commodity Services said.
Exports demand is also good given fact that India is the dominant supplier to the global market, she said and added that she was bullish on the commodity.
Other producers in Asia include Bangladesh, Pakistan, Sri Lanka, Taiwan, China, Myanmar and Indonesia. Turmeric is also produced in the Caribbean and Latin America: Jamaica, Haiti, Costa Rica, Peru, and Brazil. In India, Andhra Pradesh is the biggest producer, followed by Tamail Nadu.
Good returns from turmeric and a normal monsoon would mean increase in area under cultivation for the next season, Viswanathan said.
Sowing for turmeric starts with the arrival of monsoon. Arrival of the new turmeric crop normally starts from mid-January.
A report from Karvy Comtrade said that normal and timely monsoon is expected to result in increase in acreage by nearly 30% during this year?s kharif season.
The report states that during last year, acreage was around 1.2 lakh hectares. Turmeric availability in the last financial year was estimated to be lower around 42-45 lakh bags as against the earlier estimate of 52-54 lakh bags.
As supplies decrease further during the monsooon, prices could go up, the Karvy report added. The progress of monsoon across the major growing areas in coming days will be an important factor to watch for. If monsoon remains normal and timely, it might act as a limiting factor for sharp rise in prices, the report added.