KOCHI (Commodity Online):Recently, turmeric was dubbed as the `Yellow spice that beat the Yellow Metal' in returns on investment as prices for this versatile spice used in cooking and medicine doubled from 5000 to 10,000 levels in futures markets. The yellow metal continues its bull run but what about the yellow spice?

Turmeric prices zoomed as carry-forward stocks fell sharply this year follwoing low acreage and bad weather last year.However, the trend in futures prices seems to be changing now. All the major turmeric producing regions, Andhra Pradesh, Maharasthra, Karnataka and Tamilnadu recieved rains int he past two weeks and with National Commodity and Derivatives Exchange imposing a special margin of 10% on the long side of all turmeric contracts from last week.

With the result the benchmark December turmeric contract is now down to 9.900 levels as against the previous 10,500 levels recorded a few weeks ago. In Nizamabad, a major spot market of Andhra Pradesh, prices have fallen by over 700 rupees to Rs 10.200 levels for a quintal.Higher prices have affected demand in spot markets which is also reflecting in futures prices, according to analysts.

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This has forced the analysts to presume that the bull phase in turmeric is likely to be over by now. Prices could witness a steady to downward trend until January, when new crops start arriving. With rains sufficient in major growing regions, output is likely to be higher this year.Fresh turmeric will start arriving in spot market by February-March, while the only contract available for trade after December is April expiry,” Chowda Reddy of JRG Wealth Management told Reuters. Traders are offloading stock before December because turmeric prices may come down once arrivals start hitting markets in February, he said.

Turmeric exports climbed 7 percent to 4,000 tonnes in October 2009 from the same period last year

The year 2009 has turned out to be profitable for turmeric growers and traders as good export, domestic demand with low carryover stock resulted in a bullish trend in the yellow spice from second half of this year.The marginal increase in area under the crop in Tamil Nadu’s Erode district does not seem to have made any impact on supply. The extraction industry continues to import turmeric that domestic crop is costly and lesser in curcumin content. With the increase in demand from pharmaceutical and cosmetic industry because of its known medicinal properties, exports of the commodity is steadily climbing up in recent times.

The major buyers of the Yellow spice are UAE, Iran, Bangladesh, Malaysia and Japan. India is the largest supplier of turmeric to the world market. The other major origins are Vietnam, Indonesia and Myanmar. India contributed 60 per cent of the world’s turmeric trade and hence the output and prices here would influence the commodity’s global trade significantly. The trade has put the country’s turmeric production this year at 3,38,000 tonnes against 3,34,000 tonnes the previous season.

At the same time, turmeric consumption in India is estimated at 3-3.3 lakh tonnes, while the country’s export is around 45,000 tonnes, annually.