NCDEX turmeric prices witnessed good recovery on short covering after trading down for consecutive 4 weeks. Prices at futures started the week on slightly lower note on continued bearish trend.
However, later on futures turned positive amid lower arrivals reported across the spot markets. Traders received good orders from Gujarat and Kolkata which resulted in heavy buying from traders to fulfill their commitments.
Demand for fresh crop reported higher which further supported the uptrend. Despite of some intermittent corrections positive trend remained intact and futures prices ended the week on positive note.
Outlook
Turmeric prices are expected to trade slightly positive on brisk buying for fresh crop. Fresh orders from upcountry buyers are likely to provoke traders to buy in bulk which might add to the upside.
Good quality of fresh Salem variety is attracting exporters resulting in higher prices quoted by traders. However, if daily arrivals cross 10,000 bags than it might have negative impact on prices.
Factors to watch out
As per trade sources, arrivals at spot market of Erode were hovered in the range of 6300-8200 bags (1bag=70Kg.)
According to trade sources, fresh arrivals are gaining pace across the major turmeric spot markets
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
According to traders’ estimates supply from Tamil Nadu alone is expected around 50-60 lakh bags including 40-45 lakh bags production and 10 lakh bags of carry forward stocks (1 bag=70Kg.)
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 27th 2011 lower from $5.29 per kg quoted in the same period last year
Derivative Analysis
The NCDEX Turmeric April contract prices and volumes have increased while open interest has declined.
It is a good indication that market has a lot of traders initiating from both sides but larger traders are liquidating into the higher prices.
The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of day.
Courtesy: Karvy Commtrade Ltd.
