Bullish Fundamental factors prevailed for Turmeric and even though the volatility was a bit lower than other Spices – especially Jeera and Pepper, an overall bullish trend was maintained along with these Spices.

Good export and rising domestic demand along with reports of lower stocks support the prices. Export demand from the Gulf countries continued to be there and that had some bullish impact on the prices.

Export demand from modest Asian countries, EU and Japan were also there. Stockists were also reportedly holding back stocks in anticipation of a further rise in rates in the coming weeks.

Latest reports from Spice Board of India indicates the exports for the period April June have fallen by 11% to 14,600 MT in 2010 from 16,440 MT in 2009. But reports indicate a pick up in exports in coming weeks and an anticipated further rise in domestic demand may keep rates firm for the commodity.

The monsoon report remains important for the next few months. A better monsoon report in the growing areas has resulted in improved sowing of the new crop. Higher prices last year have ensured more sowing area for the crop this year by farmers.

The production this year is expected to be moderately up but lower stocks have been preventing a major fall in rates for Turmeric. Arrivals also get affected during the rainy season and this leads to further flare up in rates.

Thus the short term sentiments are going to be affected by the expected rise in export and domestic demand but a better crop prospect can prevent the rates from moving up a lot in the medium term.

There has been slight fall in volumes for the commodity but there are expectations that with expected rise in exports in coming weeks and domestic demand too showing a rise, one can expect the trading activities to rise and along with that a rise in volumes in the Futures market.

Courtesy: Religare Commodities

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