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Turmeric prices have been broadly range-bound since August. Arrival of medium quality turmeric in the spot market has kept the prices under check during this period. However, within this range-bound move, the prices have risen sharply in the last few weeks.
The turmeric futures contract on the National Commodity and Derivatives Exchange (NCDEX) made a low of ₹7,016 a quintal in the last week of September and had reversed sharply higher from there. It is currently trading at ₹7,420 — up 5.7 per cent from the low of ₹7,016 made in September.
Pick-up in demand coupled with reduced supply from the producing regions have aided this price rise.
OutlookThe outlook from a medium-term perspective is positive for turmeric. The 200-week moving average at ₹7,272 is providing strong support. Though this level was broken on an intra-week basis a few times, but a weekly close below this level has not been seen once.
Also, the price action in the last week of September with a long-wick on the lower side on the weekly chart reflects lack of selling interest.
This also indicates that the strong buying interest is seen at lower levels below the 200-week moving average support. The 21-week moving average has also crossed over the 55-week moving average, reinforcing the bullish outlook.
As long as the contract sustains above ₹7,200, a rally to ₹7,850 or ₹7,900. is likely in the coming weeks. Inability to break above ₹7,900 can keep the contract in a sideways range for some time. In such a scenario, a pull-back move to ₹7,300 or ₹7,250 can be seen again.
But if the NCDEX Turmeric futures contract manages to breach above ₹7,900 decisively, a fresh rally targeting ₹8,500 is possible.
The bullish outlook will get negated only if the contract records a weekly close below the 200-week moving average support level of ₹7,272.
Such a break will increase the likelihood of the contract declining to ₹6,900 over the short term.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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