Demand keeps turmeric firm despite arrivals

Good domestic buying has helped the turmeric market to firm up in the last two sessions of trade despite increasing arrivals. Contrary to the expectations that the market would ease down as arrivals increased, the seasonal domestic demand for the commodity and export demand has supported the market. Traders expect the market to remain steady and range –bound till March when arrivals start to peak.

Arrival of the new turmeric crop normally starts from mid-January. Trickles gain momentum from March and continues through June. Spot prices at the Erode market ranged between Rs 10,000-10,500 per quintal on Tuesday and the NCDEX counter showed the spot prices at the Nizamabad market as on Wednesday as Rs 11,400 per quintal.

Fayaz Hudani, analyst from Kotak commodities feels that the market has been supported by the fact that supply pipelines are almost empty. But on the short and medium term outlook he is bearish on the turmeric market due to the higher production. A report by the Tamil Nadu Agricultural University reports that the new crop is expected early from December and the total production for 2011 to be higher by 50-55 % at 70 lakh bags as against the normal of 45 lakh bags.

However, traders like RK Viswanathan of Erode Turmeric Merchants Association feels that the market would remain in the range of Rs 9,000-10,000 per quintal and not go below it. Scarcity of quality turmeric crop available with the stockists will provide support to the turmeric prices. Grinders and extractors are also waiting to replenish their inventory. “Domestic demand has improved and some export trade has also happened in the last two weeks. Arrivals the Erode market are in the range of 7,500-8,000 bags per day,” he said.

On the demand side, consumption of the commodity has been increasing robustly due to increasing usage in medicinal and cosmetic industry. Curcumin content of turmeric is an important factor in the price of the commodity and trade. Indian turmeric has the highest curcumin content and is preferred by the extractors and grinders. India is the largest supplier of turmeric in the world market.

(Source: http://www.financialexpress.com/news/demand-keeps-turmeric-firm-despite-arrivals/751110/0)