Outlook on

Outlook on Turmeric

04th November, 2015

Turmeric

Turmeric has been 's golden spice for the past five centuries and the idea of the use of turmeric is not new in India. This is one of those very few Indian products that are perceived to have both commercial as well as mythological significance. In almost every Indian household, turmeric is used not only in the culinary item but also as cosmetics. However, being a kharif crop, the productivity of the spice is very uncertain. In the past, the productivity has been severely hampered due to the various environmental hazards and unseasonal rainfall. We forecast the turmeric market in India to grow at a CAGR of 0.97 Percent, in terms of consumption, for the period of next five years.

Major varieties of Turmeric in India

Alleppey Finger (Kerala), and Salem turmeric (), Rajapore and Sangli turmeric (Maharashtra), Nizamabad Bulb (Andhra Pradesh).

Allepey Finger Turmeric, Rajapuri, Madras and Erode are some of important exported varieties. Turmeric exported in the processed form is dry turmeric, fresh turmeric, turmeric powder and oleoresin. Alleppey finger turmeric is known for its high content of curcumin, a yellow coloring substance. Its bright yellow color has been preferred by spices importers in Europe and other continents. In Middle East, the UK, USA and Japan, some of the well accepted varieties are: Alleppey Finger, Erode turmeric, Rajapore, Sangli turmeric and Nizamabad Bulb.

In Tamilnadu, the important varieties cultivated are Erode local, BSR-1, PTS-10, Roma, Suguna, Sudarsana and Salem local. Among these varieties, 70-75 Percent is occupied by the local varieties.

In India most of the turmeric used is of dried cured variety, the 'Erode' variety is the best and more popular. The 'Krishna' variety gives the highest yield of green turmeric.

Key Geographies

Turmeric is a tropical crop cultivated from sea level to 1200 meter MSL. It grows in light black, black clayey loams and red soils in irrigated and rain fed conditions. The crop cannot stand water logging or alkalinity. In India key geographies where Turmeric is largely grown: Andhra Pradesh, Karnataka, Maharashtra, Odisha and Tamil Nadu. Turmeric sowing in India starts in the month of June-July and continues till August. Harvesting season is during December to March. Outlook on Turmeric

Major Exporter of Turmeric India is the largest exporter (approximately 80%) of Turmeric followed by Thailand, other Southeast Asian countries, Taiwan, Various Pacific islands and Central and Latin American countries. Turmeric exports in FY15 were at 86000 tonnes and worth Rs 744 Cr compared to 77500 tonnes and Rs 666 Cr in FY14.

Major Importers of Turmeric

Iran, Japan, Sri Lanka, United States, United Kingdom, Middle Eastern countries, North African countries and Ethiopia.

Major Trading Centre’s in India

There are many trading centre’s for Turmeric and mainly are Nizamabad, Dugirala (Andhra Pradesh), Sangli (Maharashtra), Coimbatore (Tamil Nadu), Salem, Erode, Dharmapuri.

Demand and Supply

The demand for the commodity has been increasing rapidly from the medicinal and cosmetic industry. Total supply of turmeric for the season is estimated to decline by 21 Percent due to sharp decline in production and higher exports. Currently, a stock position in NCDEX warehouses is at 7536 tonnes.

According to NCDEX, India produces around 7 lakh tonnes of turmeric each year or around 80 percent of global production. Seemandhra, Telengana and Tamil Nadu, among southern states, are the biggest producers.

Current Scenario

Turmeric prices are likely to stay firm due to low inventory and robust export demand. Last month Turmeric sowing in Andhra Pradesh was recorded at 15753 hectares lower by about 22.7 per cent than the last year’s acreage however in Telangana, the sowing area is lower than the normal sowing area at 40823 hectare compared to 43470 hectare last year. While losses were capped by rising demand from north India. Good rains in second part of September in southern peninsula region may enhance the turmeric production and quality but lower area in Telangana may reduce production this year. Sowing in Telangana area is lower than the normal sowing area at 40823 hectare compared to 43470 hectare last year.

Outlook on Turmeric

Technical Outlook

Turmeric prices are expected to trade on a positive note as good domestic off take noticed at the Nizamabad market to meet the upcoming winter season demand. Moreover, reports of lower sowing and non availability of water in major turmeric growing state may affect yields. According to derivative analysis, prices, volumes have risen while open interest has decreased. It also gives an indication that the market is vulnerable to large price swings in short term. We expect high volatility ahead as market participants could attempt to trade from both sides of the market.

Turmeric prices have a strong support at 8600 below which prices escalation could possibly halt. We feel that prices are poised for an up-move in medium term as strong fundamentals are in place, pitching for good times ahead. A level of 9400 can be a hurdle for current uptrend, but we feel that it can overcome with strong volumes. DISCLOSURES/ APPENDIX

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DISCLOSURES/ APPENDIX