Name of presentation - MCX, NCDEX, Commodity Trading

Report
Turmeric The Wonder Spice
G Srivatsava
Foretell Business Solutions Private Limited
07 October, 2006
The All India Spices Conference
Flow of presentation
 Background
 Supply and Demand





Area
Production
Productivity
Export
Consumption
 Price analysis
 Seasonality
 Price drivers
 Forecast
Review
Outlook
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Turmeric- Background
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Turmeric -Background
 Botanical name - Curcuma longa
 Commercial application – rhizome – underground stem
 Active ingredients – Curcumin-colouring principle, aroma and
flavour
 Application in culinary, cosmetics, ayurvedic preparation,
pharma and dyeing
 Turmeric is closely linked with everything auspicious- hence
indispensable element of all celebrations, festivals.
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Turmeric - Background
India contributes 80% of world production
and roughly 60% of exports
Indian turmeric industry size is roughly Rs.
2500 – 3000 crores
Export of turmeric and its products is
around Rs. 120 – 170 crores
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Turmeric – Supply & Demand
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Turmeric - Area and Production
State
Area
Share
Production
Share
Andhra Pradesh
57.7
38.4
280.7
53.8
Tamil Nadu
16.7
11.1
65.9
12.6
Orissa
23.7
15.8
56.2
10.8
West Bengal
12.2
8.1
22.9
4.4
Karnataka
6.0
4.0
27.5
5.3
Gujarat
0.9
0.6
13.0
2.5
Kerala
2.9
2.0
6.3
1.2
Maharashtra
7.0
4.7
6.0
1.1
North East*
16.0
10.6
26.6
5.1
150.3
100.0
522.1
100.0
All India
Source: www.dacnet.nic.in/spices/
Note: Average for 2002-03 and 2003-04 & Area in ‘000 ha, production in ’000 tons
* Indicates some of Northeastern states such as Assam, Meghalaya, Mizoram, Nagaland & Tripura
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Area under turmeric
Reasons to concentrate in these
states:
 Suitable land (it thrives best in
well-drained sandy or clay loam
soils)
Turm eric - Geographical Spread
(Area - Avg from 2000-01 to 2004-05)
28%
34%
 Suitable climate (It requires a hot
and moist climate)
 Irrigation facility
6%
7%
A ndra P ra de s h
We s t B e nga l
13%
T a m il N a du
Ka rna t a k a
12%
O ris s a
O t he rs
Source: Spices Board Data
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Turmeric - Trends in area
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Trends inArea Under Turmeric inIndia
200000
180000
160000
140000
120000
100000
19
90
19 -91
91
19 -92
92
19 -93
93
19 -94
94
19 -95
95
19 -96
96
19 -97
97
19 -98
98
19 -99
99
20 -00
00
20 -01
01
20 -02
02
20 -03
03
20 -04
04
-05
Area inhectares
Decline in area since
2000-01 could be
attributed to:
 Poor prices especially
during 2000-01
 Shift towards other
crops like sugarcane
 Drought during 200304
Source: Spices Board Data
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Area under crop for 2005-06
and 2006-07
Districts
2005-06
2006-07
Crop condition
21750
18570
Satisfactory
Nizamabad
8951
9829
Good
Guntur
6200
4120
Good
Kadappa
2800
2800
Good
Erode
6125
6138
Good
Kharim Nagar
Note: in Hectares
Source: District Agriculture Departments
On the whole, this year we expect the area to decrease by about 5-7%
However, crop condition and therefore yield is expected to be better.
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India’s production trends
Factors responsible for significant
changes in output:
 Area under turmeric
-0
5
20
04
-0
3
20
02
-0
1
20
00
-9
9
19
98
-9
7
19
96
-9
5
19
94
19
92
19
90
-9
1
 Use of hybrid varieties like IISR
Prathibha
800000
700000
600000
500000
400000
300000
-9
3
 Crop maintenance
Production in tons
 Climate conditions
Trends in Turmeric Production in India
Source: Spices Board Data
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State-wise production trends
500000
400000
300000
200000
100000
0
State
Andhra Pradesh
CGR (%)
2.97
19
97
-9
8
19
98
-9
9
19
99
-0
0
20
00
-0
1
20
01
-0
2
20
02
-0
3
20
03
-0
4
20
04
-0
5
Production in tons
Trend in State-Wise Turmeric Production
Tamil Nadu
-6.69
Orissa
-0.38
AP
West Bengal
TN
Orissa
Source: Spices Board Data
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WB
Karnataka
0.69
Karnataka
1.3
Total India
0.87
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Productivity - turmeric
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-0
5
20
04
-0
3
20
02
-0
1
20
00
-9
9
Crop rotation
19
98

-9
7
Disease, insects and pests such as
rhizome rot
19
96

-9
5
Maintenance (For instance, productivity
has declined during 2001-02 due to poor
maintenance followed by lower prices)
5000
4500
4000
3500
3000
2500
19
94

Trends in Turmeric Productivity in India
-9
3
Hybrid varieties (For instance, the
mean yield varies from 4.8 to 39.1
tons/hectare in the case of varieties
such as Rajendra Sonia and IISR
Prathibha respectively
19
92

-9
1
Climate
19
90

Yield in Kgs per hectare
Constraints
Source: Spices Board Data
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Export trends
50000
40000
30000
20000
10000
-0
5
20
04
-0
3
20
02
-0
1
20
00
-9
9
19
98
-9
7
19
96
-9
5
19
94
19
92
19
90
-9
3
Source: Spices Board Data
-9
1
Qty in tons
Trends in Turmeric Exports from India
Note: Although export demand would be around 40,000 tons annually, good export demand could drive
the prices. Export demand is rising from last couple of years on account of increased non-food use
and also food use in some countries.
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Export trends
Key export markets
Note: Share based on exports for the 200304 and 2004-05
Source: DGFT, Ministry of Commerce, GOI
Value Realisation from Turmeric Exports
16000
12000
8000
4000
0
19
90
-9
1
19
92
-9
3
19
94
-9
5
19
96
-9
7
19
98
-9
9
20
00
-0
1
20
02
-0
3
20
04
-0
5
UAE - 17%
USA - 10%
Bangladesh - 9%
Sri Lanka - 7%
Japan - 7%
Malaysia - 6%
UK - 6%
Value in Rs lakhs







Source: Spices Board Data
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Export trends
Forms in which export takes
place
 Dry turmeric
 Oleoresin
Value Realisation from Turmeric Exports
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-0
5
20
04
-0
3
-0
1
20
02
20
00
-9
9
19
98
-9
7
19
96
-9
5
-9
3
19
94
19
92
-9
1
16000
12000
8000
4000
0
19
90
Note: Most of the produce shipped
in the form of dry turmeric
after polishing. In terms of
volume, turmeric oleoresin
account for about 200 tons per
annum and turmeric powder
constitutes very small portion.
Value in Rs lakhs
 Turmeric powder
Source: Spices Board Data
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Turmeric - Demand break-up
Turmeric - Demand split
Category
Demand (tons)
Household
250,000
Institutional
55,000
Oleoresin
55,000
Pharmacy
50,000
Dyeing Industry
50,000
Exports
45,000
Polish & wastage
45,000
Seeds
50,000
Total
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Applications
 As colouring Agent
 Medicinal & pharmacy product
Consumer preference
 Households - powder
 Institution - powder
 FMCG - Dry & oleoresin
 Health care - Oleoresin
600,000
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World production
Production Share (in percentage)
82
3 3 4
India
China
Myanmar
8
Nigeria
Bangladesh
Source: Spices Board Data
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Turmeric – Price analysis
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Seasonality in prices
Prices in percentage
Seasonality in turm eric prices
(Erode m onthly prices from 2000-2006)
106
104
102
100
98
96
Jan
Mar
May
Jul
Sep
Nov
Source: Spices Board Data
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Factors influencing prices
Supply side factors
 Area under turmeric (Marginal decline in output seen during current
season)
 Weather related factors
 Crop output (output likely to be normal during current season as crop
status is good so far)
 Level of stocks (Stocks are anticipated at 12 lakh bags currently)
 Farmer’s / Trader’s Sentiments
Demand side factors
 Domestic demand
 Export demand
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Turmeric spot price trend
Spot Market Price Trend: (NCDEX) Rs./quintal
 The weekly chart confirms seasonality. Prices fall during
harvest period – Dec to Mar and rise subsequently.
However, overall price trend has been bearish.

First fall –. From Rs 3238.40 levels (September 2003) to Rs
2129.55 levels (May 2005).

Second fall – From 2840.35 levels (December 2005) to a
new low at Rs 2016 levels (April 2006).

Thereafter, prices moved up towards Rs 2580 levels
(September 2006).



After unable to break above the important resistance of
Rs 2600 level, prices fell in the past two weeks ahead of
harvest season.
The downward trend remains valid in the foreseeable
future. Spot market prices may fall towards the next
major support of Rs 2200-2250 levels.
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Price analysis - NCDEX
Market Review:
 NCDEX Turmeric (Nov’06) futures prices
settled at new contract low at Rs 2505 levels
on Thursday.
 During the past 9 consecutive trade
sessions, prices fell by 12.7% from the
September 22nd high of Rs 2860 levels.
 Of course, prices have been falling in a
downward channel. If the prices continue
within the channel, then one has to look at
the next major support at around Rs 2400
level.
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Price analysis - NCDEX
Front Month Dec’06 futures
 NCDEX Turmeric (Dec’06) futures prices also fell by
12.96% to Rs 2537 levels from the September 22nd
high of Rs 2915 levels.
 Now on the upside prices may face immediate
resistance at around Rs 2600 level. Once this
resistance is broken then one has to look at the next
resistance at around Rs 2650 level.
 Volume and open interest supported the fall.
 As long as prices hold below Rs 2650 level, that will
keep the prices into negative territory.

On the other hand, prices may face immediate
support at around Rs 2500 and then Rs 2400 level.

When we look, at the weekly continuation chart, so
far, prices made two major peaks and one trough.
Source: Foretell Business Solutions Pvt. Ltd.
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Turmeric - Price Outlook
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Price outlook - NCDEX
Price Outlook:
 Overall, turmeric price trend remains bearish in
the short to medium term
 Though, festival and Indian Marriage season,
turmeric futures prices may move in southward,
due to, good crop conditions across producing areas
in India.
 NCDEX (Nov’06) futures prices may drop towards
the next major support of Rs 2350 levels. If this
support is broken then one has to look at the next
major support at around Rs 2200 level.
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Acknowledgement
Sincere thanks to Karvy Comtrade Limited and
Mr. Ashok Mittal for inviting us to this conference
To the discerning audience who have shown keen
interest in this conference
To my colleagues at Foretell for putting all the efforts
in making this presentation
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