Turmeric Prices Are Ascending due to Export Demand
Turmeric prices have hoven remarkably, reaching a nearly 13-year peak, amid concerns over reduced crop area and a scarcity of seeds for re-sowing in specific regions. Traders are hopeful, anticipating a continued bullish trend with prices potentially nearing the 2010 peak of USD 2,07 per kg in the spot market.
On Tuesday, turmeric October futures saw a considerable increase and reached USD 1,58 per kg. Meanwhile, in the spot market, the finger variety of turmeric commanded a modal price of USD 1,20 per kg at Nizamabad yard, and rates in Maharashtra’s Nanded yard soared to levels of USD 1,19.
Factors causing an uptrend
The upward trend in turmeric prices is attributed to several factors, including reduced arrivals in the markets, delayed sowing, unfavorable weather conditions, and lastly healthy export demand. There is approximately 50% deficient rainfall in Maharashtra’s Marathwada and Vidarbha regions, compounded by potential El Nino impacts. It has raised concerns about overall crop acreage.
Turmeric exports have seen a noteworthy boost since the Covid pandemic, registering an impressive 11% year-on-year increase and figured at 1.70 Million Tonnes in the present year 2022-23. However, the situation worsens due to the scarcity of seeds in Maharashtra, causing prices to rise threefold as a result of the acute shortage. Although farmers in Tamil Nadu and other southern states may have sufficient seeds, the overall sowing coverage remains limited, standing at only 65-70% compared to the previous year’s levels.
Turmeric Acreage Decline and Quality Concerns Fuel Price Rally
Interestingly, research suggests that the decrease in turmeric acreage is primarily due to farmers’ diversification. They are getting lower returns compared to other crops like cotton and maize. It is predicted that a significant 12% decline in the total turmeric-growing area compared to the previous year’s 0.175 million hectares, a factor that could drive prices even higher, potentially exceeding the 2010 peak.
Compounding the challenges, the current Kharif season has experienced reduced sowing activity, exacerbated by unseasonal rains in March, which adversely affected the quality of the turmeric crop. As a result, the demand for good-quality turmeric has increased over the past few months, exerting further upward pressure on prices.
Conclusion
In conclusion, the turmeric market is having an unprecedented increase in prices. The combining factors are reduced crop area, scarcity of seeds, and healthy export demand. Uncertainties of the weather and sowing conditions in key growing regions continue to play a crucial role in determining the market dynamics in the coming months. Overall, there is a bullish trend, raising optimism that prices may reach the peak levels.
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