Turmeric gleams again as demand exceeds supplies

Turmeric futures have begun to surge again across various agri-terminal markets in the country as lower production this year has resulted in demand exceeding supplies, traders and industry participants said,

“Futures touched ₹20,000 a quintal a few sessions ago and have dropped to between ₹18,500 and ₹19,500. There could be ₹1,000 movement either up or down,” said Sunil Patil, proprietor, Varadlaxmi Trading in Sangli, Maharashtra.

“There has been a sharp rise from ₹16,000 to ₹20,000 in a short span of time as demand exceeded supplies. However, people turned cautious at ₹20,000,” said Ankit Agarwal, Director at Erode-based Amar Agarwal Foods India Ltd. 

“Turmeric prices have turned volatile as the crop is low this time and the question is how supplies will turn out to be in May,” said RKV Ravishankar, President, Erode Turmeric Merchants Association. 

Current prices

On Tuesday, turmeric (farmer polished) ended at ₹18,982 for June contracts on NCDEX, while August futures closed at ₹19,636, a fair indication of tight supplies ahead.

In Nizamabad, turmeric (farmer polished) was quoted at ₹17,593.65, while the superior Rajapore variety ruled at ₹18,994.90 at Sangli. 

According to the first advance estimate released by the Ministry of Agriculture and Farmers’ Welfare, turmeric production is likely to be 10.74 lakh tonnes this crop year to June against 11.70 lakh tonnes last crop year.

“We think the crop is some 30 per cent lower than last year. In addition, farmers are holding back another 5 per cent for resowing,” said Agarwal. 

Demand may take a hit

“Supplies have been lower this year and in another 15-20 days the situation will be clear. Elections to the Lok Sabha have also led to lower arrivals in parts of Maharashtra,” said Patil. 

“There are various figures on the production being lower. It will mean that demand will be 25 per cent lower than normal due to higher prices,” said Ravishankar.

“The market has turned bullish and 90 per cent of the crop has arrived across most parts of the country. We see only one-way movement,” said Nizamabad-based trader Amrutlal Kataria.

But Patil and Agarwal said turmeric prices might first stabilise before beginning to surge again. “We see prices rising to ₹22,000 by the end of May. Currently, purchases are on a hand-to-mouth basis,” said Patil. 

“Buyers have turned cautious and they are not building inventories. We have also told our clients not to go long as it is not worth taking risks at such high prices. Prices could head towards ₹22,000 by June,” he said.

La Nina returns

“No one is sure where turmeric is headed. They may top ₹22,000 or even head further higher,” said Kataria.   

Export demand for turmeric is good, though high prices are playing spoilsport, traders said. Turmeric exports during the April-January period of 2023-24 were lower at 1.32 lakh tonnes against 1.36 lakh tonnes in the year ago period. However, in terms of value they were up at $177.03 million compared with $169.81 million. 

With the India Meteorological Department (IMD) predicting the re-emergence of La Nina this year, rains during the south-west monsoon will hold the key to next year’s crop and price movements.

“If the monsoon arrives on time, prices could drop to levels of ₹17,000-18,000,” said Patil.

“If the spatial distribution of monsoon rain turns out to be good in turmeric-growing areas, then the area under turmeric this year will increase by 1.5 times in Telangana, two times in Maharashtra and 2.5 times in Tamil Nadu totally resulting in area doubling,” said Agarwal. 

“The area under turmeric will rise this year if rains turn out to be beneficial,” said Ravishankar. 

If monsoon turns out to be good, some of the stockists could rush to the market to sell. This could result in prices dropping sharply, said Agarwal. However, this is likely only after July.