The commodity markets regulator, the Forward Markets Commission (FMC), has so far found no irregularities in turmeric trade. There were allegations of manipulation being responsible for the dramatic price rise in the last three months.
“We do not have any evidence of price manipulation. But, as a regulator, we would always like to ensure that in the process, none of the participants have the potential to disturb the market equilibrium or distort price discovery,” said Rajeev Agarwal, member, FMC
Agarwal was in charge of the investigation into the price rise. The commodity for delivery in May recorded a 71 per cent price rise since January, which traders said was a consequence of shortages.
May contracts were trading early Thursday evening at Rs 12,600 a quintal as against Rs 7,397 a quintal on January 1. The medicinal herb, also used as a spice, rose 3.79 per cent on Thursday’s close at Rs 12,139 a quintal.
The regulator has already raised margins in commodities to as high as 32 per cent on the buy side and is open to increase it further, if need arises. It says it is also continuously monitoring developments.
In the spot market, the price rise this year has been 30 per cent at Sangli. The price was Rs 130 a kg on Thursday as compared to Rs 100 a kg on January 1.
Attributing the price rise to shortages, Sharad Shah, director of the Sangli-based Shri Halad Vyapari Association, said the price would reach Rs 200 a kg by the end of current season. Turmeric is sown between June and August for harvesting between December and March.
“When prices were ruling high in the spot market early last year at Rs 150 a kg, futures kept low. Therefore, either spot prices fell or futures surged. Since April and May, futures were keeping their respective lows till early this year in anticipation of the commodity’s high arrivals due to harvesting around these months. But, as time passed, arrivals dwindled due to crop losses and prices started shooting up,” Shah said.
The output this season was estimated at 4.2-4.3 million bags (1 bag = 80 kgs) against 4.9-5 million bags in the previous season. India’s annual consumption is estimated at 4.5-4.6 million bags. According to Spice Board data, turmeric exports in February 2010 stood at 2,500 tonnes, down 19 per cent from the same month a year earlier.
