Turmeric touches multi-year low

The turmeric futures contract tumbled during the week ended May 5. There was high selling pressure due to increase in supply across major markets. Further, demand was also lacklustre. Turmeric prices fell to a multi-year low of ₹5,300 per quintal during the week before witnessing a recovery on late profit booking. Hence, the most active May futures closed the week at ₹5,340 per quintal, down 11.85 per cent over the previous week, while the next month June futures contract closed with a loss of 11.38 per cent over its prior week’s close.

Turmeric output in the 2016-17 crop year is estimated at around 7.5 million bags, up 25 per cent compared to the previous year’s crop, thanks to increase in acreage and supportive weather conditions across States, including Telangana, AP and Maharashtra.

On the export front, India exported about 85,500 tonnes of turmeric during April-December 2016, up 24.64 per cent from the same period last year, according to data from the Spices Board.

Demand for turmeric in the international market has been rising steadily owing to increase in consumption. Market participants’ focus may now shift towards the monsoon in 2017 and corresponding turmeric acreage in the upcoming sowing season. Though the IMD projects normal rainfall, we will need to wait to see the actual rainfall and its distribution during the monsoon months.

Outlook

For the week ahead, turmeric futures may trade sideways to lower. As prices fell to a multi-year low, some recovery during the week is expected but it may not be significant given the overall bearishness in the market.

The writer is Head-Commodity Research, Karvy Comtrade

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