Turmeric - The Wonder Spice

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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

3
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
All India 150.3 100.0 522.1 100.0
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)
• Suitable climate (It requires a hot and moist
  climate)
• Irrigation facility

Source Spices Board Data
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Turmeric - Trends in area

• Decline in area since 2000-01 could be attributed
  to
• Poor prices especially during 2000-01
• Shift towards other crops like sugarcane
• Drought during 2003-04

Source Spices Board Data
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Area under crop for 2005-06 and 2006-07
Districts 2005-06 2006-07 Crop condition
Kharim Nagar 21750 18570 Satisfactory
Nizamabad 8951 9829 Good
Guntur 6200 4120 Good
Kadappa 2800 2800 Good
Erode 6125 6138 Good

• 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
• Area under turmeric
• Climate conditions
• Crop maintenance
• Use of hybrid varieties like IISR Prathibha

Source Spices Board Data
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State-wise production trends
State CGR ()
Andhra Pradesh 2.97
Tamil Nadu -6.69
Orissa -0.38
West Bengal 0.69
Karnataka 1.3
Total India 0.87
Source Spices Board Data
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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

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 2003-04 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
• Turmeric powder
• 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.

Source Spices Board Data
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Turmeric - Demand break-up
Turmeric - Demand split 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 600,000

• Applications
• As colouring Agent
• Medicinal pharmacy product
• Consumer preference
• Households - powder
• Institution - powder
• FMCG - Dry oleoresin
• Health care - Oleoresin

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World production
Source Spices Board Data
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Turmeric Price analysis
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Seasonality in prices
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.

Source Foretell Business Solutions Pvt. Ltd.
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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.

Source Foretell Business Solutions Pvt. Ltd.
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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
  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 (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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Thank you
Foretell Business Solutions Private
Limited 3530, 13th H Main, I Cross Road, HAL II
Stage, Bangalore 560 008 TeL [phone] /
153, Fax [phone] Email foretell_at_fbspl.com W
eb www.CommodityIndia.com