NMCE likely to launch futures of Erode-origin turmeric

India's third largest commodity exchange National Multi Commodity Exchange (NMCE) is planning to launch turmeric futures of Erode variety shortly.

"We have applied to the Forward Markets Commission (FMC) for clearance. As soon as the regulator approves our proposal, we will flag off this commodity on our platform," said Poonam Gupta, vice-president, NMCE.

The exchange is hoping that the Erode variety will repeat the performance of the Nizamabad-origin turmeric, which contributes Rs 4254 crore every month to the National Commodity and Derivatives Exchange (NCDEX). Of late, turmeric has witnessed a huge volume surge with each passing contract on the NCDEX.

Gupta rejected the view that the success of turmeric futures on NCDEX persuaded NMCE to start trading on the commodity. "Instead, we decided to honour the demand of Erode-based traders," she said.

According to the feasibility study prepared by NMCE, Erode contributes about 17 per cent of India's total turmeric production of 51 lakh bags (75 kg each). The exchange has fixed a trading and delivery of 10 tonnes, while the quotation would be based on per quintal basis ex-Central Warehousing Corporation (CWC) Erode inclusive of the value added tax (VAT). The price band is fixed at 3 per cent of the last traded price and 6 per cent of the last closing price in either direction.

The exchange proposes squaring up of positions between 17th and 20th of every month as the contracts would expire on 20th. The compulsory delivery contract would ensure the limit at 3000 tonnes and 9000 tonnes for clients and members respectively.

India accounts for about 80 per cent of world turmeric production with about 1.5 lakh hectares under cultivation, with Andhra Pradesh occupying almost 40 per cent of area coverage and 63 per cent in production share.

Turmeric production in India has been fluctuating throughout last decade. The production was at 3.92 lakh tonnes in 1990-91, 7.07 lakh tonnes in 1993-94 and 7.196 lakh tonnes in 2000-01. The output in 2002-03 was recorded at 5.82 lakh tonnes and 6.78 lakh tonnes in 2004-05. This year the industry estimates a total production at 51 lakh tonnes as against 46 lakh tonnes last year.

Not only India is the largest producer of turmeric in the world but also largest consumer.

Domestic consumption accounts for nearly 93-94 per cent of the total production. India exports this member of spices family for medicinal and other purposes to almost all developed countries.