Turmeric bearish on estimates of higher production and supplies

1. Turmeric bearish on estimates of higher production and supplies
In 2016, turmeric future prices on the National Commodities and Derivative Exchange (NCDEX) has
been in downtrend due to availability of sufficient stocks in the domestic market.
In the first quarter, prices started to decline following peak arrivals in Feb’16. The negative
momentum continued in the next two quarters as stockists as well as upcountry traders were
holding higher stocks due to superior production and higher carryover stocks.
Moreover, steady imports throughout the first six months of the year kept the stocks higher in the
domestic market. The exports have also grown during the same period due to arrival of good quality
turmeric and declining prices. The forecast of above normal monsoon also pressurized prices.
In 2016 (YTD), turmeric prices in NCDEX slipped from Rs. 10,166 per quintal in January to Rs. 6,588 in
September, decline of more than 32 per cent. Moreover, prices declined by 18.4 per cent in the last
four weeks on reports of higher acreage and satisfactory progress of turmeric crops.
Despite this, turmeric price in 2016 is on higher side compared to last four years because of lower
production during last two consecutive seasons coupled with good export demand.
Higher acreage
The acreage of turmeric during current year is higher compared to last two years due to normal
monsoon rains in the main turmeric growing States of Tamilnadu, Telangana and Maharashtra,
which occupy about 60 per cent of total turmeric area in the country.
As on 14th
Sep 2016, turmeric acreage in Telangana was up 12 per cent at 46,000 hectares compared
to 41,000 hectares last year. In the current season, major turmeric growing districts in Telangana viz.
Karimnagar, Nizamabad, Warangal and Adilabad received normal rains. Similarly, major turmeric
growing areas of Tamilnadu and Maharashtra too received good rains.
Trade sources are expecting turmeric production to cross 11 lakh tonnes (lt) in 2016-17 compared to
8 lt during last two years due to good monsoon season and higher acreage.
6800
7300
7800
8300
8800
9300
9800
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Source: Reuters, Angel Commodity
Monthly Average Prices of Turmeric (Rs per Quintal) - NCDEX

2. During the current year, higher arrivals in the domestic markets and steady imports of turmeric by
the industrial buyers hurt turmeric prices.
Higher arrivals and Import
The arrival of turmeric in the country has been declining since last three months; although it is 70
per cent higher compared to last year arrivals. As per the Agmarknet data, the quantity of turmeric
arrivals in country is reported at 1,85,198 tonnes till August in 2016, up 60 per cent compared to
1,15,579 tonnes last year.
In FY 2016-17, turmeric imports into the country in first three months, increase by 26 per cent to
5,069 tonnes compared to last year (4,019 tonnes) and imports have doubled in last two years.
Imports of turmeric in India are largely taking place from Myanmar, Ethiopia and Vietnam.
Price outlook
Turmeric prices have been under pressure in 2016 and expected to remain bearish due to steady
supplies and anticipation of higher output next year. We expect turmeric prices to touch Rs. 6,600
per quintal (CMP: 6,970), if weather holds good for rest of the season. However, if weather plays any
vagaries during the next two months the prices may shoot up to Rs. 8,000 levels.