Turmeric futures are significantly surging, breaking the $1,21 per kg threshold on the NCDEX. Since February, this surge has been unprecedented due to a complex interplay of weather and agricultural challenges, pointing towards a potential decrease in turmeric sowing.
Prevailing weather conditions
The recent surge in turmeric futures is closely linked to prevailing weather conditions. Delayed monsoons and inadequate initial rainfall have hampered turmeric cultivation, potentially leading to higher prices shortly. A shortage in present market supply further contributes to this upward trend, with futures prices witnessing a staggering 60 percent increase over the past two months.
Decreased cultivation
The recent turmeric crop has faced multifaceted challenges, including decreased cultivation and adverse weather events. Regions like Maharashtra and Andhra Pradesh, known for their robust turmeric production, have experienced heavy rain-induced crop damage. This unfortunate combination of factors raises concerns about a potential decrease in turmeric production, leading to escalated prices.
Shadow of El Nino
The looming threat of El Nino casts a shadow over the upcoming turmeric crop. Meteorological predictions suggest the activation of El Nino in July, potentially resulting in reduced rainfall and drought conditions. Such conditions could particularly impact yields, like turmeric, that heavily rely on monsoon irrigation. Late monsoons have already caused a delay of 15-20 days in sowing, potentially exacerbating the situation.
Farmers, learning from past experiences, have diversified their cultivation strategies, branching into alternative crops due to suboptimal profits from turmeric last season. This shift in focus has led to expectations of a 20-25 percent decrease in turmeric sowing this year, notably in states like Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana.
While the immediate surge in futures prices could hint at a price increase, the interplay of these multifarious factors demands a strategic and nuanced approach. The impending months will unveil whether this anticipated decline in turmeric sowing will lead to an escalation in market prices, underscoring the importance of informed decision-making for importers.