In his office above a room stacked with jute sacks of turmeric, Deepak Shah is extolling the virtues of the spice. "It's very good for health, it's used in cooking, in cosmetics, and it's medicinal," says Shah, owner of P. Amratlal & Sons, a trader at Mumbai's wholesale Vashi market.
It's also expensive. Rising demand and falling stockpiles, as well as market speculation in the curry ingredient, have pushed up the quoted price of turmeric 114 percent this year, to a recent 15,806 rupees per 100 kilograms, or $348 for 220 pounds on India's National Commodity & Derivatives Exchange. Turmeric's advance is more than eight times the gain of India's benchmark stock index. "Spices, especially cardamom, pepper, and turmeric, are contributing to overall inflation," says Harish Galipelli, vice-president at Kochi-based JRG Wealth Management, a commodity broker.
India controls 42 percent of the $2.8 billion world spice trade and consumes 90 percent of what it grows. Growing affluence in India is driving up local demand, while Westerners are consuming more spices as well. "My customers get angry at me, as if I have control over the prices," says Namdev Jagannath, owner of Namdev Jagannath Sopariwala, a spice retailer started half a century ago by his father in Mumbai. "We have to pass on the costs."
Turmeric's jump in value has prompted some market players to view it and other spices as commodity investments like gold or copper. "There's a lot of speculation," says Prakash Namboodiri, general manager of AB Mauri India, a unit of Associated British Foods. "A person who has got a lot of money can sway the markets"—and a smart one can make a lot of money trading in spices. Average daily turnover as measured by the value of spice futures on the commodity exchange in September doubled, to 6.6 billion rupees, from a year earlier.
Much of India's physical spice trade takes place in wholesale markets like Vashi, 22 miles (35 kilometers) northeast of Mumbai's business district. Shops display cardamom pods, cinnamon bark, tamarind, and open sacks of deep red chilies under the glare of naked electric bulbs. Telephones ring endlessly as electric fans push the warm air.
Demand for turmeric and spices of all kinds is expected to keep rising. "In 40 years we have basically tripled the use of spices in the U.S., and those trends are taking place in other countries, particularly in Europe," says Al Goetze, chief spice buyer with McCormick & Co. in Maryland, the world's largest processor of spices. "Consumers today are more interested in more flavorful foods."
The bottom line: Turmeric, a key ingredient in curry, has risen sharply in price because of increased demand and low inventories.