Prices of turmeric futures on the National Commodity and Derivatives Exchange (NCDEX) have dropped nearly 14 per cent over the last three weeks after having surged about 20 per cent last month without any specific reason.
According to traders, turmeric futures suddenly surged to over ₹8,500 quintal from around ₹7,000-7,200 before making a climbdown.
On Thursday, turmeric (unpolished) futures price for October delivery was quoted at ₹7,522 a quintal, up a tad over Wednesday’s price. On August 25, the price had surged to ₹8,686 a quintal – a recent high.
According to NCDEX data, spot prices (Nizamabad) of unpolished turmeric were ₹7,248 a quintal compared with ₹7,672 on August 25. Data from Nizamabad agricultural marketing committee showed that the price was ₹6,291 a quintal at the terminal market compared with ₹6,566 on August 26.
‘Returning to normal’
“Prices of turmeric futures went up too sharply and too quickly by 19 per cent without any demand being witnessed. They are now returning back to normal levels,” said Amrutlal Kataria, a trader from Nizamabad in Telangana.
“Prices of futures on NCDEX are declining since there is no demand and no takers for turmeric,” said Sunil Patil, a turmeric supplier from Sangli in Maharashtra.
“Demand in August is usually slow but it picks up in September. Despite two weeks having gone this month, we are not seeing any demand. We hope it will pick up, though futures surged without much reason,” said RKV Ravishankar, President, Erode Turmeric Merchants Association.
Domestic demand continues to be subdued as witnessed in the earlier months. “You can even term demand as dull. Export enquiries are also down despite the fact that shipments abroad had held up turmeric prices,” said Kataria.
“There has been continuous supply of fair average quality (FAQ) turmeric from Hingoli region (Maharashtra) which has kept prices on the leash. Farmers had been holding their produce expecting prices to rise but now that we are heading towards the season-end, they have begun to unload,” said Patil.
Ravishankar said exporters did not have much stocks with them, which meant the demand for exports was good. “Exports are continuing,” he said.
Premium for quality
“Premium quality turmeric still commands a good price between ₹8,500 and ₹10,000 a tonne. But lower-priced FAQ is offering stiff competition in the global market. Also, there is excess supply in the market currently,” said Sangli-based Patil.
Nizamabad trader Kataria said turmeric prices could further come under pressure. “Prices are likely to drop below ₹6,500 before December,” he said.
Erode merchant association’s Ravishankar said prices in Erode were already ruling lower in view of slack demand.
“It will take November-December before we get a proper grip of the market, mainly in view of the growers’ offloading of their stocks. We will also have some idea about the new crop due for arrival from January onwards by then,” said Patil.
New crop info
He said a clear picture on turmeric sowing this year will be available by the month-end.
“The new crop could be 15-25 per cent higher. Though there are reports of floods in the growing areas, the impact has been minimal,” said Kataria.
Earlier in February, turmeric prices had surged over ₹9,000 a quintal in the spot markets across the country on fears of crop shortage. However, since then prices have dropped and been range-bound below ₹7,500 mainly due to slack demand.
Covid shutdowns to control the pandemic have affected turmeric offtake even as supplies improved.
According to data from the Ministry of Agriculture and Farmers’ Welfare, turmeric production last season (July 2020-June 2021) is estimated at 11.02 lakh tonnes (lt) compared with 11.06 lt during 2019-20 season despite the area under the crop increasing to 2.95 lakh hectares from 2.84 lakh hectares.