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  Turmeric prices could fall on high output, huge stockpile
http://economictimes.indiatimes.com 07122010
Turmeric prices are seen headed southwards. After having touched Rs 17,000 per tonne mark a few months ago, bears have slowly but steadily been tightening their grip on the golden spice. For turmeric futures, the first support is pegged at Rs 14,050 and if this is broken, it could hit Rs 13,375. Spot turmeric prices are ruling in the Rs 14,000-14,800 mark. Technical analysts also endorse the view that in the short-term bears are in control and hence shorting the market at current levels would be ideal.

30-40% stocks with farmers, traders

Traders say the bearish outlook also has to do with the news of huge stock-pile with both farmers and traders. At the Erode market in Tamil Nadu, for instance, it is estimated that stocks in the hands of farmers and traders has risen year on year by as much as 30% to 40%. Farmers have been holding back stocks in the belief that prices would rise higher enabling them to make additional profits. Typically, a farmer achieves break-even at realisations of Rs 8,000 per bag and one acre of land under turmeric yields a profit of close to Rs 1 lakh.

Further price fall expected this month

Exporters and traders believe that the additional stocks would come into the market ahead of the beginning of the month of Aadi or Ashad (the inauspicious month in the Hindu calendar) leading to a glut in supplies and a further fall in prices. Most exporters and traders are seen staying on the sidelines and resorting to just-in-time purchases for meeting production/export requirement. Some export orders have been booked in the price range of Rs 158-160 per kg. Typically, there is a price differential of Rs 10-12 per kg in the prices between Erode and Nizamabad with the former being more expensive.

Production could top 30-25 lakh bags

Indian turmeric production in the ensuing kharif could hit the 30-35 lakh bags mark against last year’s 12-14 lakh bags. Higher prices have encouraged farmers to bring additional land under turmeric cultivation this year. Increased acreage under turmeric is being reported in Tamil Nadu like Gobichettypalayam, Kodumudi and Bannari. Andhra Pradesh, Maharashtra and Karnataka along with Tamil Nadu are expected to see a 25-30% rise in turmeric acreage in the ongoing kharif season. However, if rains play truant like in 2009, traders do not rule out the possibility of a rise in turmeric price, though it could be muted compared to what was witnessed last year.

Overseas demand could keep prices high

Exporters believe that only an increased offtake due to demand in Middle-East can see a rise in prices. Demand for Indian turmeric is robust in markets like Dubai and Japan.

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