Low Stock Levels and Potential Price Increases

As the festive season approaches, the turmeric market is facing a potential surge in prices. Low stock levels, reduced production, and increased demand are key factors contributing to this situation. Turmeric prices are expected to rise in the coming days due to a significant reduction in stock levels. The director of Erode-based Amar Agarwal Food India Private Limited estimates that there are currently around 0.50 million bags (55 kg each) of turmeric available in the country. With six months remaining until the new crop arrives, this limited stock could lead to a price increase.

Analysts suggest that a reduction in the final stock of 2024 could lower the stock-to-use ratio from 10.49% in 2023 to 5.83% in 2024. This potential decrease in the stock-to-use ratio is expected to push prices higher. A commodity research analyst noted that producers are holding back their stocks in anticipation of higher prices. This trend could further support the demand during the festive season.

Market Trends and Current Price Stability

The market has witnessed a decline in demand due to price stability and lower consumer interest during the June-August period. Agarwal mentioned that prices are relatively stable now, as demand usually dips during the monsoon months. However, the turmeric market experienced a significant price increase earlier this year. In May 2024, prices on the NCDEX (National Commodity and Derivatives Exchange) reached an all-time high. Fears of reduced production primarily drove this spike due to unfavourable monsoon conditions despite increased acreage. Prices on the NCDEX have risen by over 15% in 2024, reflecting the market's sensitivity to supply and demand fluctuations.

Impact of Monsoon and Production Levels

Monsoon conditions and production levels have also influenced the turmeric market. A good monsoon, particularly in Maharashtra, helped stabilize the market to some extent. However, despite the increased area under cultivation, lower production has led to a shortage of stock this year. Agarwal pointed out that even with higher sowing, the current stock levels are not sufficient to meet demand. The Spices Board reported a 20% year-on-year decline in turmeric exports during April-May 2024. This decrease in exports is attributed to high domestic prices, which have made Indian turmeric less competitive in international markets.

Future Outlook and Sowing Trends

Turmeric prices may rise further after Ganesh Chaturthi, as demand typically increases during the festive season. Due to high prices, the area under turmeric cultivation is expected to increase in major producing states like Telangana, Maharashtra, Andhra Pradesh, and Tamil Nadu. The analyst confirmed that turmeric sowing in the country has been completed as anticipated. In Maharashtra, the area under turmeric cultivation has increased by 30-35% compared to last year. Across India, the total area under cultivation is projected to rise by 20-25% compared to the previous year. Initially, it was expected that the area could increase by 60-100%, but high seed prices and a lack of quality planting material have tempered this growth. Overall, the area under turmeric cultivation may increase by 30-40% this year.

The turmeric market is poised for a potential price surge as the festive season approaches. With low stock levels, reduced production, and increased demand, prices are expected to rise in the coming months. Exporters and traders should be prepared for these market shifts and adjust their strategies accordingly. The increase in cultivation area and anticipated higher demand will play a crucial role in shaping the market conditions for turmeric.