Turmeric prices that saw a short burst of an upturn recently on weak monsoon rains are unlikely to sustain the uptrend mainly due to ample supplies, traders at Nizamabad, a major turmeric trading centre, said.
“Turmeric prices are likely to move up by another Rs 400-500 for 100 kg at the most. The maximum that this commodity can move up to is about Rs 6,000 for 100 kg,” said Mr A. Sandeep of Nizamabad-based Prasanth Traders.
Turmeric prices had seen record high prices in 2010 due to a major shortfall in output. In that year, near-month turmeric futures had touched a historic high of Rs 16,350 for 100 kg on the National Commodity and Derivative Exchange.
The surge in prices had prompted farmers to shift large tracts of non-turmeric growing areas under this crop taking supplies substantially higher during the next year.
Weak monsoon
Turmeric output in 2009-10 was around 47 lakh bags (1 bag = 75 kg each). In the following year output rose to 69 lakh bags and in 2011-12 the production is estimated to be around 90 lakh bags, Ms Vedika Narvekar, senior analyst, Angel Commodities said quoting trade sources.
According to her, the current surge in turmeric prices was caused mainly due to insufficient monsoon rains.
Already, farmers have shifted large turmeric growing areas to other lucrative crop including soyabean as prices of the commodity have been languishing at low levels for quite some time. Additionally, weak monsoon rains have dampened sowing prospects.
“The acreage is likely to be lower this year,” said Ms Narvekar.
She also does not expect prices to go above Rs 6,000 level. “It is very doubtful that prices would move above this level,” she said.
Strong fundamentals
The current uptrend is temporary, said Mr Dharmesh Jain, analyst at Ventura Securities.
“Technically, turmeric futures are in overbought position but current fundamentals are strong,” he said but added that Rs 6,500 for 100 kg level is likely to be the cap in the current uptrend.
Turmeric futures for August delivery hit the 4 per cent upper circuit today at Rs 5,696 for 100 kg. This contract has risen by 50 per cent from a low of Rs 3,732 for 100 kg traded on June 6.
The July contract which expires today has also made similar gains during the same period.