It has been an impressive upside rally for turmeric in the current month. Prices have surged to a five-year high in 2021 because of lower crop outlook versus previous season, and upgrading of this year’s demand situation by the market men, as compared with the year before. Spot prices of Nizamabad have appreciated by nearly 15 percent from January 31st. Turmeric crop for this year was projected to be around 98 lakh bags (each of 60 kg), till September 2020. However the rains during October 2020 caused flooding situation and higher moisture. As such there were reports of a 10-15 per cent of the crop losses in regions around Telangana, Karnataka and parts of Maharashtra.
Domestic consumption has improved significantly after the Covid outbreak, mainly because of the efforts of the Aayush Ministry and influence of the traditional knowledge about spices being a strong immunity builder, especially turmeric, which is being consumed by a large number of Indians since the second quarter of 2020. Prices were up between June and August, followed by a short term reversal as stockists and farmers preferred liquidating most of their stocks, on receiving better prices for their produce. The reversal phase continued till November and prices have been trending upwards till now. Increase in export sales is another factor supporting the upward price trend.
Purchases from Gulf countries, Malaysia, Singapore and other European countries have increased by approximately 40 per cent in the recent past.India’s turmeric exports during April-September 2020 increased by 42 per cent to 99,000 tonnes compared with the year-ago period. For the full year, India’s turmeric exports during 2019-20 stood at 1.36 Lakh tonnes.Robust demand is also seen due to upcoming Ramadan period and ongoing marriage seasons. Increase in export sales and rise in the domestic use of turmeric as an immunity builder are amongst the major positive price drivers. The concept of immunity booster is very much influential these days not only in India but across the globe and turmeric is a natural immunity booster. We often hear of turmeric milk being sold in big stores and retail outlets. All in all domestic as well as overseas demand prospects are quite high for Indian turmericfor this year. This can lead to further growth of trade volumes across the physical business centres of the country. Because of the Covid-19, turmeric consumption has improved by nearly five lakh bags each in domestic and overseas markets. As a result, we inventories were absorbed rapidly,and at present India is reportedly having note more than 20-22 lakh bags of old stocks.
The crop loss is estimated to the extent of 10-15 per cent over previous year. Therefore against the earlier expectations of 97-98 lakh bags, India’s production size may reduce to 89-90 lakh bags. The new season arrivals have started in key markets such as Nizamabad and Erode and moisture percentage is presently more than 15-18 %.For the past two-three years, turmeric has been an underperformer compared with other agri-commodities. But surely, this year will be pretty well for farmer and trade persons in terms of getting decent returns. As the supply season is still far away, trades are getting materialized without necessary bargains by the buyers, and this will keep the market supported after every moderate correction. The supply side is constrained hence there is less chance of any sharp reversal from the upward trend during the peak supply season (Between April and May 2021). Prices may resume the upward trend after second quarter of 2021.
