Turmeric prices likely to fall 20% on high output

Higher production of turmeric in the next year is likely to pull down prices by over 20 per cent, according to market sources. But much depends on the weather, which has to be rain-free, in the top-two producing states, Andhra Pradesh and Tamil Nadu, during the next few weeks.

The output is estimated between 52 lakh and 55 lakh bags (each bag is of 75 kg) against the last year's production of 47 lakh bags, up by 15 per cent.

"With farmers shifting from cotton to turmeric, the crop's acreage has increased resulting in higher output," said a Nizamabad-based trader.

At present, the country has a stock of around 9.5 lakh bags. Of this, about 3 lakh bags are expected to be consumed by the year-end, leaving a carry-forward stock of 6.5 lakh bags.

"The arrival of the new crop will start by January and procurement from farmers will be complete by June. Going by the current yield estimates, prices are expected to be in the weaker zone, as the country will have a total stock of 60 lakh bags," said Milan Shah, a Sangli-based trader. There is a probability of prices hovering around Rs 1,600 to 1,800 a quintal, he added. He said buyers will not go in for the new turmeric crop at a level of Rs 2,200. The prices should come down, he added.

Domestic consumption of the country makes up 90 per cent of the total output. The rest is exported mainly to the sub-continent, the Gulf countries and South Africa.

"Post-Diwali, the export demand firms up. However, this time, it did not happen so, as China had a good crop," said Indranil Mukherji of Angel commodities. This, in turn, has resulted in a rise in the carry-forward stocks.

Andhra Pradesh accounts for around 25 lakh bags, followed by Tamil Nadu (18-20 lakh bags). Maharashtra's production is between 4-5 lakh bags.

The near-month contract of turmeric on National Commodity & Derivatives Exchange (Ncdex) closed at Rs 2,049 a quintal on Monday, up by Rs 9 against the last week's close. The price of the April contract rose to Rs 2,202 from the the last close of Rs 2,191.