The NCDEX October contract has immediate strong support at Rs 5,700 per quintal.
Futures have shown appreciated by more than 10 percent over last month. As the unlocking of nation's economy started, household consumption picked up and similar trend was noticed in medicinal industry as well as exports. So it can be inferred that local as well as overseas demand for turmeric has started improving.
Due to efforts of Agriculture Ministry and increasing awareness about spices being a strong immunity builder, especially turmeric, number of Indians preferring increased consumption of turmeric has improved in last few months.
Out of the estimated total production of 9,38,955 tonnes in 2019-20, annual exports till December 2019 stood at 1,01,500 tonnes as per trade sources. India is the world's largest supplier of turmeric contributing nearly 70-75 percent of global production. As the perception of turmeric being an immunity-boosting product increases, domestic and export demand has started improving.
Exporters have reported that overseas purchases have been increasing for Indian turmeric since April in retail chains in the UK, Germany and Holland. Interesting to note, the entire spices basket has fetched good returns for the country in June. Sowing prospects have reduced as markets had moved in a moderate price band of Rs 500-7,000 per quintal since last 3 years.
There are reports of farmers likely to shift some of the turmeric cultivated areas towards planting of soybean/maize/cotton etc. Therefore sowing prospects are lower for the coming season, indicating drop in production outlook.
All in all, growing demand prospects – export as well as domestic, ongoing festive season, cheaper prices and lower sowing possibilities shall keep price outlook positive for coming month. Most of the inventory is with farmers and they are willing to sell only after noticeable price appreciation.
The NCDEX October contract has immediate strong support at Rs 5,700 per quintal. Immediate Resistance is at Rs 6,120. Closing above that could lead to levels of Rs 6,700-6,900 till October-end.
(The author is VP - Retail Research at Religare Broking Ltd.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.