The NCDEX turmeric extended the bearish trend for 3rd consecutive week on selling pressure. Prices at futures started the week on negative note on extended correction.
Spot market remained close till Tuesday due to Pongal festival.
Therefore, in absence of fresh cue from spot market futures also traded down. Rising fresh arrivals along with poor bulk buying from traders further added to the down side.
Increased arrivals of Mysore variety turmeric pulled down the prices drastically. Therefore, reacting to prevailing fundamentals futures also ended the week on negative note.
Outlook
Turmeric prices are expected to continue the bearish trend on rising arrivals across the spot market. However, short covering at huge losses can be seen initially in the week which might create further selling the market.
Traders are not getting fresh orders from north Indian buyers. Therefore, poor demand might keep prices under pressure during the week. However, local masala buyers are buying in small amount which might cushion prices from huge losses.
Factors to watch out
As per trade sources, arrivals at spot market of Erode were hovered in the range of 3800 - 6300 bags (1bag=70Kg.)
According to trade sources, Harvesting has been started in Erode and after drying and processing arrivals will start by 2nd - 3rd week of February
As per data released by Spices board, during Apr-Nov, 2011 Turmeric export from India were reported up by 63% to 58,000 tonnes against the same period last year
As per Spices Board data, international price of Turmeric in New York market remained unchanged to $5.62 per kg during the week ended January 13th 2011 lower from $5.29 per kg quoted in the same period last year
Derivative Analysis
The NCDEX Turmeric April prices, volumes and open interest have increased. It is a good indication that the price decline is being caused by disgruntled long position holders being forced to liquidate their positions. Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.
Courtesy: Karvy Commtrade Ltd.
