Significant Reduction in Turmeric Stock Triggers Price Increase
The current turmeric market is poised for a price surge due to a substantial 41-42% decrease in the existing stock from previous seasons. This tightening of supply, coupled with heightened activity in the futures market for June deliveries. It suggests an impending shortfall that could drive prices higher by $0,12 per kg from current levels.
Speculative Activity In The Market
Over the past week, the price of turmeric has already climbed by $0,16 to $0,17 per kg due to low productivity and increased buying from stockists and speculators. This trend is expected to continue, with potential additional increases of $0,12 to $0,18 per kg as market pressures build. Currently, the older stock from 2022 and 2023 is swiftly depleting, which will likely exacerbate the supply issues.
The futures market has indicated a reduction in turmeric deliveries for May, influenced by delays in the upcoming crop and dwindling old stock. This scenario has bolstered forward deal prices, which in turn is projected to boost spot market rates. The current retail price of turmeric is around $1,94 to $1,95 per kg. But it could soon reach up to $2,04 per kg.
Trading Updates and Price Corrections
Recent trading activity has seen prices for the 2023 harvest rise from $1,89 to $1,94 per kg, with anticipated short-term increases of $0,12 to $0,18 per kg. While a minor correction of $0,02 might occur, traders are advised to capitalize on every price increase.
Regional Production Challenges
Turmeric is predominantly cultivated in the loamy fields of South India, including regions like Erode, Warangal, and Nizamabad, where about 80% of the crop is typically harvested unprocessed. Recent stormy rains in November have damaged the crop in lowland areas, further complicating the supply landscape. Despite robust planting, the expected yield might not exceed 5.6 to 5.7 million bags. With an additional 0.5 million bags of older stock possibly being preserved.
Demand Outstrips Supply
With both export and domestic demand nearing 14 million bags, the available stock is insufficient to meet market needs. This imbalance was evident last year when turmeric prices peaked during May-June, climbing to $1,91 in Delhi, with transactions even reaching $1,88. This marked a significant recovery from lows of $1,41 to $1,42 seen three months prior.
With limited stock and high demand, the turmeric market is experiencing robust momentum, promising lucrative opportunities for those engaged in the spice trade.