Turmeric prices to head north next month onward

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Going by the sowing figures, the area under turmeric cultivation in the 2019-20 season has shrunk.




The golden spice, turmeric, is one the agricultural crops that have been hit by erratic rains in the 2019 monsoon season. Despite this, market participants are cautious. Thus, the price of this spice is not holding above Rs 7,000. One of the reasons for higher prices not persisting is demand-side fundamentals, currently a bleak picture, both in terms of domestic consumption and exports. News sources say that exports to Iran have been at a standstill since May on the expiry of the US-sanctions waiver to India. This has happened after 2018-19's record turmeric exports (more than 120,000 tonnes).

Added to this is the actual 2019-20 crop size, it is not as bad as the market was anticipating. In fact, the crop in Nizamabad, one of the major turmeric belts in Telangana, is in very good shape. This area enjoys more than a 20 percent share of total turmeric harvested. Nevertheless, in other turmeric-growing areas, we may see output contracting perhaps because of the smaller area sown with turmeric or the erratic monsoon.

In Nanded, Hingoli, and Basmath in Marathwada, the area is sown with turmeric are 10-15 percent lower. This region has emerged as one of the largest turmeric-growing belts, accounting for more than a 20 percent share of turmeric harvested in India.

The AP Horticulture Department reported turmeric sowing largely lagging. Kadappa and Dugiralla belts of AP account for over 10 percent (6-7 lakh bags) of total production. Lastly, in Erode district, Tamil Nadu, the area sown with turmeric is smaller as farmers this year have shifted to more remunerative crops.

Thus, going by the sowing figures, the area under turmeric cultivation in the 2019-20 season has shrunk. If the weather in the coming months turns favorable, the yield might be higher and counter to some extent the impact of the less sown area. In either case, a drop in the price would be contained. Turmeric production in the 2018-19 season was 65-67 lakh bags.

At present, demand (physical) is very low. However, we are now heading toward the peak demand period, September to November. The new turmeric crop arriving at markets is still four months away. Thus, there is ample headroom for turmeric prices to head north next month onward.



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