Turmeric The Wonder Spice

G Srivatsava
Foretell Business Solutions Private Limited

07 October, 2006

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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 radesh
West B engal

13%
Tamil Nadu
Karnataka

12%
Orissa
Others

Source: Spices Board Data

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Turmeric - Trends in area

Trends inArea Under Turmeric inIndia

200000
180000
160000
140000
120000
100000

Area in hectares

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

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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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Indias production trends

Factors responsible for significant
changes in output:
Trends in Turmeric Production in India

Climate conditions
Crop maintenance
Use of hybrid varieties like IISR
Prathibha

Prod uctio n in tons

Area under turmeric

800000
700000
600000
500000
400000
300000

Source: Spices Board Data

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State-wise production trends

State
Andhra Pradesh

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2.97

Tamil Nadu

-6.69

Orissa

-0.38

West Bengal
Source: Spices Board Data

CGR (%)

0.69

Karnataka

1.3

Total India

0.87

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Productivity - turmeric
Constraints

Climate

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

Maintenance (For instance, productivity

has declined during 2001-02 due to poor
maintenance followed by lower prices)

Disease, insects and pests such as

rhizome rot

Crop rotation

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Source: Spices Board Data

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Export trends

Source: Spices Board Data

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

UAE - 17%
USA - 10%
Bangladesh - 9%
Sri Lanka - 7%
Japan - 7%
Malaysia - 6%
UK - 6%

Note: Share based on exports for the 200304 and 2004-05

Source: DGFT, Ministry of Commerce, GOI
Source: Spices Board Data

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Export trends
Forms in which export takes
place
Dry turmeric
Oleoresin

Value Realisation from Turmeric Exports

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.

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V a lue in R s la k hs

Turmeric powder

16000
12000
8000
4000
0

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

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

Nigeria

Bangladesh

Source: Spices Board Data

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Turmeric Price analysis

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Seasonality in prices

P ric e s in p e rc e n ta g e

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)
Farmers / Traders 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 (Nov06) 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 Dec06 futures
NCDEX Turmeric (Dec06) futures prices also fell by
12.96% to Rs 2537 levels from the September 22 nd 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.
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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 (Nov06) 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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Foretell Business Solutions Private Limited

#3530, 13th H Main, I Cross Road, HAL II Stage, Bangalore
560 008
TeL 080-25276152 / 153, Fax: 080-25276154
Email: foretell@fbspl.com
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