Turmeric witnesses divergent trend

The futures and spot markets of turmeric are moving in different directions. The futures have shown signs of strengthening, while the other spot prices have dipped.

Market sources said that spot market was trading in accordance with the bearish fundamentals and prices should fall further, where as movements in futures could be termed as a short-term trend.

According to analysts, the farmers' reluctance in bringing crop to the market at such lower prices might be stoking the bullish sentiments in futures. The near-month contract saw a surge of Rs 39 a quintal in the first two trading days of the current week. Similarly, the turmeric contract for June delivery climbed Rs 38 a quintal and is currently trading above Rs 2,200 a quintal. Commodity analysts said the June contract, where huge volumes are being traded, could even go above Rs 2,260 in the next couple of days. They said that futures market has a strong support at Rs 2,140 a quintal. 
 

YELLOW FEVER Spot prices of turmeric across the major centres
Centre	Rs per quintal
Nizamabad	1,750
Erode	1,900-2,050
Warangal	1,800-1,950
Duggirala	1,750-1,950
Cuddapah	1,800-2,000

On the spot market front, prices have fallen by Rs 75 -100 a quintal. Traders spoke about the possibility of a further decline. "The seasonal demand is now over. The exports' demand has come down as a consequence of rupee appreciation and countries such as China, Burma and Vietnam have also started growing turmeric. All these factors should take the spot market southwards," said Manubhai Shah, a Mumbai-based trader.

Mapparaju Rao, an analyst with Religare commodities said, "In a month's time, we see the spot prices coming down to as low as Rs 1,800 a quintal. The futures market will see a movement between Rs 2,150 and Rs 2,250 a quintal."

Expressing his agreement, Shah said that owing to the high production output, we expect the prices to stabilise between Rs 1,750 and 1,800 a quintal. Meanwhile, there are demands for more turmeric storage houses in Warangal and Erode. Turmeric traders said the existing godowns are full and there is still a lot of crop lying outside.

Shah said that National Commodity and Derivatives Exchange and Forward Markets Commission have been requested for more storage houses, so that farmers could go for hedging.

This season, the country is expecting 51 lakh bags (each of 75 kg) which is higher in comparison with last year's output of 45 lakh bags. However, the market sources said domestic demand was weaker this year compared with the last year, despite the good crop.