Spot prices at the terminal market of Erode and Nizamabad even touched Rs 135 per kg during November as reports of low physical stocks and damage to the new crop scared traders. Farmers and traders who held on to their stocks had an excellent year after prices rallied following heavy rains in October.
RK Viswanathan of Erode Turmeric Merchants Association feels that more than 25% of the farmers who held on to their stocks gained the maximum.
Overall also it has been a windfall for farmers as the market remained firm for the whole year. From the normal price level of Rs 40-50 per kg, the market has touched new highs and broken past records, he said.
He expects more farmers to turn to turmeric farming given the good returns in the past year.
Karvy Comtrade in a research report said that the bullish trend in turmeric started after production dropped from 52 lakh bags in 2007-08 to 42 lakh bags this year (1 bag = 70 kg).
India is the largest producer and exporter of the commodity across the globe, so shortfall here is enough to trigger a positive sentiment regarding the spice throughout the world.
India contributes around 78 % of the global turmeric production while other major producers are China (8%), Myanmar (4%), Nigeria (3%) and Bangladesh (3%).
Turmeric prices have risen by 138% in 2009. The average price in January was Rs 39 per kg while the average during November was Rs 93. Realization has been very good, Nalini Rao, a research analyst at Angel Commodities Broking told FE. She feels that the trigger point for 2009 has been the good exports and lower crop.
Good demand in 2009 also means lesser carryover stock for the next season, Nalini said.
Carryover stocks are at their lowest level in the trade. Hardly two lakh bags of stocks are their in the physical market compared to nearly 12 lakh bags at the end of 2008, she added.
Demand for turmeric is robust with the steady rise in export of curry powder and turmeric powder. Exports for the current fiscal would be lower by 10-15% from the performance of 2008-09.
Exports of turmeric from India during 2009 were at an all time high both in volume and value. India exported around 52,500 tonne of turmeric in 2009 valued at Rs 248.58 crore as against 49,250 tonne valued Rs 157.00 crore last year.