Impact of Speculators on Market Prices

There has been a 37-38 percent decrease in the production of turmeric compared to normal, and this time the old stock has been cut by 80 percent. Despite these conditions, speculation has caused a slowdown in the futures market. After a recent rise, prices fell due to speculative trading. Now, the slowdown is ending at the current price, indicating a return to profitable business.

There is a monopoly of box trade in turmeric. About one and a half months ago, speculators increased the trade significantly from August to October, selling six times more goods than the production. This caused the market to drop by $0,24 per kg from the peak, creating an opportunity for speculators to profit from lower prices. This collusion harms hundreds of traders while serving the interests of a few big speculators.

Old Stock Depletion and Reduced Arrivals

The old turmeric stock from the past several years has been depleted, and the current season's production is estimated to be 37-38% less than normal. This has led to a 60% decrease in arrivals in the mandis compared to the same period last year. Despite these shortages, speculators have been continuously selling in the futures market for the past one and a half months, resulting in two bearish circuits.

The price of 2023 turmeric, after being sold at $2,22 per kg, has now dropped to $1,92 per kg, with no buyers at these prices currently. The reality is that purchases were made once at a higher price due to the June deadline. But now, with no trade for July's turmeric, prices for August are expected to be manipulated. This uncertain policy aims to break the market and remove some traders from the trade before allowing the market to grow again.

Potential for Future Price Rise

There is not much turmeric available for delivery in the futures market, and spot stock is low compared to recent trades. This suggests a conspiracy to break the market and remove traders before the market grows again. Therefore, there is no need to panic and cut goods at the current price.

The old stock of around 2.4-2.5 million bags has been reduced to only 0.4-0.5 million bags. Hence, a logical rise in prices is expected in the future. The pressure of the current year's turmeric is not evident in any market, and the old turmeric from 2022-23 is mostly gone. Therefore, a further rise of $0,24 per kg is expected from the current prices. The current season's turmeric is estimated to be around 6.4-6.5 million bags, with a total availability of 7 million bags, including 0.5 million bags of old stock. Meanwhile, domestic and export consumption exceeds 12.5 million bags.

The turmeric market is currently in a slump due to speculation, despite significant production decreases and old stock reductions. As speculative activities wane, prices are expected to rise again, driven by supply constraints and increased demand. Traders should remain vigilant and avoid panic selling at current prices, anticipating a future price surge.