Turmeric reels under slack demand

Continuous lacklustre demand and a good monsoon will further intensify the bearishness in the turmeric market, with commodity analysts and traders expecting a market crash while foreseeing a further decline in the rates in the range of Rs 50-100.

In major centres like Sangli, Erode and Nizamabad, stocks of the commodity are piling up. In Nizamabad, it is around 4 lakh bags (each of 75 kg), whereas there are 12 lakh bags in Erode and 1.8 lakh bags in Sangli.

"The rate in the Sangli spot market has already fallen by around Rs 100 a quintal in the last couple of days. As demand in the local market is negligible, the market will crash further," said Milan Shah, a Sangli-based trader.

The prevailing rates in Nizamabad mandis is between Rs 1,875 and Rs 1,900 a quintal. In Erode, it is Rs 1,950-2,050 a quintal while in Sangli the average rate has hovered around Rs 2,050 a quintal. The Salem and Rajapuri varieties are being traded at Rs 2,700-3,000 and Rs 2,350-2,750 a quintal respectively.

In FY07, the country produced 52 lakh bags of turmeric, 13 per cent more than the previous year's production of 46 lakh bags. Due to this phenomenal rise, the turmeric market has been reeling under a bearish phase, which will only intensify further. And with an average monsoon on the cards, crop production will only add to the pile-up of stocks.

"The market will remain weak. The weak trend will continue as the off-season has set in. Moreover, there is no export demand at present," said an analyst with Agriwatch Commodities. Sources said that by August demand from the Gulf countries is expected to stoke bullish sentiments into the market.

Sowing for 2007-08 has started. Reports suggest that this year too the crop would be normal signalling the fact that the weaker trend in market will continue. On the Ncdex, the near-month contract of turmeric opened the week at a firmer note. In the initial hours, it went as high as Rs 2,176 a quintal but later came down and closed the day at Rs 2,165 a quintal. Last week, it closed at Rs 2,147 - a drop of Rs 20 compared to previous week's closing.