Festive demand spurs turmeric market

After a long bearish phase, the turmeric market has turned bullish in the last week on the back of rising festive demand. However, market sources dismissed the rally as short-lived, adding that prices would slip soon as the demand would not last for long.

Though the new crop is still four months away, initial estimates put the crop size at 45 lakh bags (each of 75 kg) for 2007-08, down 14 per cent against the last year's 52 lakh bags. Low price realisation, ranging between Rs 1,700 and Rs 2,000 a quintal has contributed to the decline in the crop acreage by around 25 per cent.

Despite a likely decline in output, marketmen are divided over the course of the turmeric market.

Milan Shah, a Sangli-based trader, said, "We anticipate an output of 42 lakh bags this season, along with a carry-forward stock of 13 lakh bags in January. Out of the carry-forward stock, stockists are expected to corner around 5 lakh bags." The remaining 7-8 lakh bags would not be sufficient for the January-March period next year, when the arrival would start, he added. "With consumption around 47-48 lakh bags a year, a bullish trend is on the cards," he said.

On the other hand, there are others who see a bearish trend ahead. According to them, the crop size would be 45-46 lakh bags, with a carry-forward stock of 15 lakh bags, making a total of around 60 lakh bags, similar to the last year's crop size. "October will see demand rising and prices could scale up by around Rs 200 a quintal. But by December, the market will fall as demand cannot be sustained," said Manu Shah, a Mumbai-based trader.

Badruddin Khan, a senior research analyst at Angel Commodities, said, "Demand in October normally goes up and so do the rates. The futures could see an upward rally of around Rs 60-100 a quintal, but the momentum will not be sustained as fundamentals indicate a bearish trend."

Marketmen said a recent spell of cyclical showers in Andhra Pradesh and Tamil Nadu (the turmeric-growing states) would prove useful to the crop. So far, the crop was reported to be in a pretty good state and the yield could be better, said an analyst of Agriwatch Commodities.

In Sangli, Maharashtra, turmeric rates in the physical market rose by around Rs 100 a quintal on Monday over the last week's rates.

On the National Commodity and Derivatives Exchange (NCDEX), the October futures closed the day at Rs 2,077 a quintal, down by Rs 10 or 0.48 per cent against the last week's close of Rs 2,087 a quintal.

New marts not feasible

The country's turmeric consumption is around 85-90 per cent of the annual production. However, low demand in the domestic market, contrary to market expectations, has led to a prolonged bearish sentiment. Analysts said that prices would not have crashed had India had a wider overseas market. However, they added that finding newer markets was not possible.