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									                     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
  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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India’s 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
    Source: Spices Board Data                    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
                                                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

    Category               Demand (tons)

    Household                           250,000

    Institutional                        55,000   Applications
                                                   As colouring Agent
    Oleoresin                            55,000
                                                   Medicinal & pharmacy product
    Pharmacy                             50,000
                                                  Consumer preference
    Dyeing Industry                      50,000
                                                   Households - powder
    Exports                              45,000    Institution - powder
    Polish & wastage                     45,000    FMCG - Dry & oleoresin
                                                   Health care - Oleoresin
    Seeds                                50,000

    Total                               600,000


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World production




           Source: Spices Board Data
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Turmeric – Price analysis
The All India Spices Conference




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)
   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.                           Source: Foretell Business Solutions Pvt. Ltd.

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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.                                            Source: Foretell Business Solutions Pvt. Ltd.

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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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                                         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
                                                                  Web: www.CommodityIndia.com


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