Spot prices closed higher at the NCDEX counter on Wednesday at R4157.15 per quintal. However, futures fell on Tuesday on profit booking.
Sown area in Andhra Pradesh is lower by 60-70% when compared with last year and 20-30% lower when compared with a normal year. Last year was an exceptional year and production was very high. Low returns and erratic monsoon has resulted in lower acreage for turmeric, Fayaz Hudani, analyst from Kotak commodities told FE.
The production during 2011-12 is estimated around 82 lakh bags when compared with the production of 69 lakh bags during 2010-11. Monsoon rains are not supporting the crop, he added.
Chowda Reddy, senior research analyst of JRG Wealth Management feels very bullish about the market. There are reports that some farmers in Andhra Pradesh have shifted to soya due to lower returns from turmeric. Trade circles reports that the coming crop would be lower by 20-30% when compared with last year, he added.
Turmeric prices fell 80% from record high of R16,350 per quintal in November 2010 and touched 42 months low of R3,360 per quintal. Turmeric futures have recovered by about 30% in the past few weeks due to lower production estimates for coming season and good buying. This gain in prices is expected to extend in coming months, as supply season remains lean with next crop coming only in February 2013. In futures market, prices may touch R6,500 per quintal in next 3-4 months, Chowda Reddy said.
Lower domestic prices helped in higher exports, which touched a record of 79,500 tonne during the last FY. This 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. On the demand side, consumption of the commodity has been increasing robustly due to increasing usage in medicinal and cosmetic industry. India leads in turmeric production with 78 % of the global production, while other major producers are China (8%), Myanmar (4%), Nigeria (3%) and Bangladesh (3%).