Turmeric Outlook: Turmeric Gains Nearly 9% This Month So Far; What Next?

MUMBAI (Commoditiescontrol) - Spot turmeric witnessed nearly 9% surge so far this month supported by some demand at the lower level and prospects of production to fall next season amid expected losses in acreage as farmers are likely to shift to other remunerative crops.

There are talks in the market that turmeric prices are likely to rise sharply ahead due to expectations of lower production followed by increase in demand, however market experts are not very bullish about the commodity since supply-demand are pretty much well balanced, however they didn't ruled about short-term gain.

In order to analyze turmeric market outlook, commoditiescontrol.com spoke to industry players to prepare a balance sheet and understand the current market situation.

Though turmeric prices rose nearly 9% this month, but it is still nearly 17% lower this season mainly due to lackluster domestic demand and decent supply. Turmeric production, however dropped this season, but offset by good carry-over stock from previous crop.

Domestic market witnessed poor demand at one end, but at the same time turmeric export turned higher in marketing year MY 2016 (Jan-Dec) compared to a year ago. According to agriculture ministry, turmeric shipment during 2016 rose 29.85% at record 1.14 lakh tonnes against 0.88 lakh tonnes a year ago.

Meanwhile export of turmeric during the first three month of current MY 2017 was much better 55.08% higher at 0.31 lakh tonnes from 0.13 lakh tonnes corresponding period last year. The sharp rise in turmeric export was mainly due to attractive rates.

Industry players are very much optimistic about turmeric export for the current MY 2017 and expect it to surge to new record level as prices are nearly 36% lower from peak Rs 9,015/100kg of last year.

India is the largest turmeric exporter in the world with 70% market share followed by 8% by China and then 3.5% by Myanmar. The other major producers are Nigeria, Ethiopia, Indonesia, Vietnam and Bangladesh.

However India turmeric rules in the global market as it possess high amount of curcumin content, aroma and taste.

Turmeric Acreage May Fall
A turmeric trader from Sangli expressed that turmeric area in Maharashtra is likely to drop as farmers didn't get better rates so far this season. Farmers in Maharashtra is likely to prefer sugarcane over turmeric as they have received better return last season compared to yellow spice.

However Poonamchand Gupta, a veteran turmeric trader from Nizamabad didn't see sharp slump in production and expect it around 2016-17 level.

Huge Difference In Trade-Govt Production Estimates
There is huge difference in trade and government production estimates for 2016-17. India agriculture ministry in second advance estimate pegged turmeric crop higher at 10.52 lakh tonnes against 9.43 lakh tonnes in 2015-16. However industry players ruled out higher production and their estimates comes out somewhere around 4.69 lakh tonnes for 2016-17 versus 5.6 lakh tonnes a year ago.

Spot Price Movement
Spot turmeric during the current season so far traded between Rs 5,376/100kg to Rs 7,000. Turmeric prices started the season with decline and it continued up to May 10, 2017, however thereafter slow arrivals amid farmers reluctance to sell their produce at the lower level supported by improved domestic demand and dry weather in key producing regions helped prices to recover sharply by 9%.

Demand in turmeric is not very encouraging after recent surge, but there is still some room left for upside due to lack of proper distribution of rainfall.

Conclusion
Demand in turmeric at present is poor at the higher level after recent surge, which may limit upside. But since weather is dry in most turmeric producing regions, which may provide some cushion to the prices. At present, supply-demand is pretty much well balanced and future course of price trend is now heavily depend on monsoon progress at the key producing regions. Good monsoon in turmeric areas may result in better yield and offset any possible drop in acreage. Turmeric sowing usually starts from June till July and harvest commences from January onwards.

TECHNICAL VIEW - TURMERIC NIZAMABAD (FIRST MONTH - CONTINOUS CHART)
Minor Pullback Possible - (Report Published On June 21: Last Close: 5770)

Support is at 5129-4800. Expect minor pullback towards DRV-6473. Weakness will continue below 5377.

Conclusion
Support at lower range and minor pullback possible.



(By Commoditiescontrol Bureau; +91-22-40015533)