TURMERIC

Turmeric Aug contract at NCDEX gain by 0.25% pared early gains to end steady on profit-taking at higher levels after rising about 10% in a month. Scarcity of rains in Karnataka, Andhra Pradesh and Maharashtra, the major producers, has been delaying cultivation and acreage may fall in the current season. A drop in arrivals in the physical market was also supporting prices.
Futures may trade in narrow range for next few days. By the month end sowing picture will become clear and then futures will find direction.

Turmeric arrivals in Nizamabad spot market dropped by 14.76% to 49,091 tones in the first half of 2008, compared to the same period last year due to an estimated fall in the output, an official said recently.

There are concerns that farmers may shift to other crops due to lower rainfall. Lower rainfall may force farmers to opt for corn and soybean crops, which require less water than turmeric and are also giving good returns. The long term outlook is bullish as carry over stock is likely to go down due to last year's lower output.

However, cultivation in Maharashtra, Karnataka and Tamil Nadu is progressing well and farmers are cultivating the spice on higher acreage due to higher prices. The cultivation starts with the arrival of monsoon rains in June in southern and western states, the major producers.

Turmeric acreage is likely to increase, but not too sharply, as cost of cultivation has also increased and that is trimming farmers' profit. Turmeric cultivation will gain momentum in July. Then we will have an idea about next year production and prices will find clear direction.

Stockiest are holding back the stock in anticipation of further improvement in prices.

According to an industry estimate, traders are holding close to 150,000 tones of turmeric, or over 20% of annual domestic consumption, while fresh arrivals are likely to begin from February onwards. Indian turmeric crop in 2008 season is likely to be harvested in February-March.

As per rough estimates by local traders, turmeric production during next season is likely to be 44-45 Lakh bags, while carry-forward stocks will be 13-14 Lakh bags against last years crop estimations of 50-51 Lakh bags.
According to traders, the 2008 turmeric output may fall by around 22 percent to 4.2 million bags each of 70 kg. In 2007, production was 5.4 million bags and carryover stock from 2006 was 600,000 bags. Total consumption in 2007 is estimated at 4.8 million bags and 1.2 million bags are expected to remain as carry-over stock for next year.