Turmeric prices may rise further due to AP rains

The delay in drying of turmeric due to rains in Andhra Pradesh is likely to result in higher prices of the commodity. The spice, which is already in a bullish phase, is expected to register a decline of around 15 per cent in crop size this year.

"Crops are in the drying stage and, at some centres, harvesting has not yet begun. In such circumstances, the rains in Andhra and certain parts of Maharashtra adjoining Karnataka will delay drying and, in turn, slow down arrivals," said Sudha Acharya, analyst at Agriwatch Commodities.

On Monday, after the markets opened following a long weekend, Nizamabad (one of the delivery centres) was reported to have received just 1,500 bags of turmeric as against the usual number of 10,000 bags during this period.

The new centres, including Duggirala and Warangal, have not seen much arrivals so far.

Marketmen and commodity experts say the bullishness in turmeric prices is here to stay.

Over the last five months, turmeric futures have nearly doubled to Rs 3,500 a quintal. Faiyaz Hudani, analyst at Kotak Commodities, said, "In the short term, there could be some profit booking but in the coming days, levels of Rs 3,800 a quintal are within reach."

The country is expecting an output of 42-43 lakh bags (each of 75 kg) this year as against 52-53 lakh bags last year. According to Milan Shah, a Sangli-based trader, turmeric prices will keep going up.

Although domestic demand is good, overseas demand has witnessed a decline raising concerns whether the export target of 50,000 tonnes will be met.

On an average, the country exports 10-15 per cent of the total produce annually.

During April-February 2008, the country exported 44,000 tonnes which is more than 6 per cent less than what was exported in the corresponding period in the previous year.

"Rise in turmeric rates have retarded exports and the target seems unreachable," said Hudani.

On the National Commodity and Derivatives Exchange, the near month contract for turmeric closed at Rs 3,270 a quintal on Tuesday as against the previous close of Rs 3,369 a quintal.