Prices of the golden spice suddenly spurted last week, making a new contract high on fears that heavy rains in Andhra Pradesh and Tamil Nadu might damage the standing crop.
This long-growing-season spice was sown in June at the commencement of the monsoon. in the major growing areas of AP, Tamil Nadu and Maharashtra the area sown with turmeric was reported around 10-12 percent more. Also, adequate rainfall boosted yield, except in the Marathwada district of Maharashtra. Thus, bright crop prospects have, till early last week, held turmeric prices down since mid-October.
Market sources say the Phethai cyclone has slightly damaged the turmeric crop in Duggirala and Cuddapah. These two belts account for over 10-12 percent of Indian turmeric production. Meanwhile, a section of the trade community is of the view that a reasonable amount of rain is better in the harvesting of the crop.
Turmeric output in the 2018-19 season was earlier pegged at about 20 percent higher. But considering scanty rains in the turmeric-growing districts of Marathwada (Nanded, Hingoli and Basmat), which accounted for over 20-22 percent of turmeric production in the 2017-18 season, output may be lower than earlier estimates. The recent damage, if any, in Duggirala and Cuddapah would further curtail output.
Sources say, 2018-19 output may still be higher than last year's 65 lakh bags (1 bag = 65kg). In Tamil Nadu, turmeric acreage in the 2018-19 season increased a whopping 80 percent from 2017-18; in Telangana, acreage is estimated to be 6 percent higher in 2018-19, at 47,888 hectares.
In the last two years, the largest turmeric-growing belt (Erode) received less-than-normal rains, which had led to low output. In fact, the share of the Erode region in turmeric production fell to 8-10 percent in 2017-18, less than half of the 20-25 percent output share, two or three years ago. However, sources say that 2018-19 turmeric crop from Erode would be double than 2017-18.
On the trade front, turmeric exports in the first half of FY18-19 surged by around 10%, reducing carried-forward stocks of the 2017-18 season to 18-20 lakh bags, down from last year's 28-30 lakh bags.
Considering lower arrivals in physical markets the near term outlook for turmeric is positive. Price gains beyond Rs 7,000 may however be restricted considering harvesting of the new crop starts in January. Harvesting starts in January in AP, followed by Maharashtra in February and Erode in March. Accordingly, we may see seasonal supply pressure on turmeric prices in coming months.
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Source: Moneycontrol
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