Turmeric Prices Stabilize After Sharp Decline

Turmeric prices dropped over 20% from their peak in May but may rise again during the festive season due to low stock levels. Currently, about 5 million bags (55 kg each) of turmeric remain in the country. With six months until the new crop arrives, Ankit Agarwal, Director at Amar Agarwal Food India Pvt Ltd, warns that the market may face a "hand-to-mouth" situation, leading to another price rally.

AgriWatch's Senior Research Analyst, Biplab Sarma, predicts prices will rise because 2024’s ending stocks will be lower, reducing the stock-to-use ratio from 10.49% in 2023 to 5.83% in 2024. Additionally, Commodity Research Analyst Anu V Pai from Geojit Financial Services notes that producers are holding onto their stocks, expecting higher prices, which could increase during the festive season.

Production Concerns and Market Stabilization

Turmeric October futures currently trade at $1,97 per kg on the NCDEX, with spot prices around $1,93 per kg in Nizamabad. Prices hit a record high of $2,44 per kg on NCDEX in May due to fears of reduced production from poor weather, despite increased acreage. Turmeric prices have risen by over 15% in 2024.

Despite the rise, market signals remain mixed. Turmeric prices stabilized recently because demand slowed during June-August, and a strong monsoon in Maharashtra helped balance the market. Sarma predicts turmeric arrivals in spot markets will decrease soon.

Higher Sowing Area Could Boost Future Output

Despite increased turmeric acreage, lower production this year has created a stock shortage. The Spices Board reports that turmeric exports fell by 20% year-on-year during April-May due to high prices. Although exports slowed, Ankit Agarwal emphasizes the need for sufficient stocks for both exports and domestic demand next year.Turmeric prices could rally after Ganesh Chathurthi. Major growing states like Telangana, Maharashtra, Andhra Pradesh, and Tamil Nadu expect to see higher turmeric acreage. Sarma mentions that turmeric sowing is complete, with Maharashtra seeing a 30-35% increase in area compared to last year. Overall, all-India turmeric acreage may rise by 20-25% from last year.

However, high seed prices and limited quality planting material tempered initial expectations. Agarwal estimates the actual increase in turmeric acreage this year could be 30-40%. Pai stresses that final output will depend heavily on the monsoon and weather conditions during the crop's later stages.

Turmeric prices, after a significant drop, could rebound during the festive season due to low stocks and strong demand. While increased sowing brings hope, the market's future hinges on weather conditions and the upcoming crop season.