Turmeric may Trade Down on Sluggish Demand.

After the rise in price seen the earlier few days Turmeric showed some corrections on profit booking at the higher levels as traders waited for dips before initiating fresh queries in the mandis. Some export queries from mid east Asian countries have been noted. Moderate domestic demand too has been there. Arrivals remained low amidst lower stocks. Good crop prospects from good rainfall activities in the growing areas have been there. Stockists reportedly held back their stocks in anticipation of a rising demand in coming days. Exports are also expected to rise and that could support the prices in the medium term. Short term trend would remain volatile as traders wait for corrections for buying opportunities. Good rains in the growing areas of AP and Karnataka raised possibilities of a better crop this year.

With sowing area in these 2 states expected to rise it can pressurize the prices to some extent. Traders expect production to range between 65 70 lakh bags vs ~48 lakh bags last year (1 bag = 70 75 kg). Reports of low carryforward stocks are likely to support the prices in the medium term. There are expectations of farmers switching to this crop this year as the returns last year had been good. This is expected to improve the crop production aspects. Good weather prospects are likely to increase the sowing area for the commodity this year and help improve prospects for a better crop. Latest reports from Spice Board of India indicates the Turmeric exports for the period April August have fallen by 13% to 22250 MT in 2010 from 25500 MT in 2009.

Source : indiainfoline.com