G. K. Nair
Kochi, Feb 27
Cloves prices have shot up in the Indian and international markets on severe shortage caused by crop damage in several producing countries.
Trade sources told Business Line that there were buyers for Colombo cloves at Rs 375 a kg. The prices in Colombo have risen to $7,500 a tonne from $6,200 a tonne and “it is on the rise as days pass by”. If the current trend persisted the price might cross $8,400 a tonne, they claimed.
Severe shortage in India is forcing buyers to cover from Colombo at the prevailing prices. The advantage for the Indian importers is the four per cent import duty, they said. The prices for other origins such as Zanzibar and Madagascar are at $7,000 a tonne and it will become costlier as the import duty is at 35 per cent, they said. Zanzibar, Madagascar and Comoros cloves prices would come to Rs 425 a kg at present, they said. The crop in Indonesia, the biggest grower of cloves in the world, has reportedly failed due to unfavourable weather.
The “cigar companies will need 25,000 tonnes, and there is not so much cloves available in any of the origins”, they said.
Indian production of cloves continued to remain negligible when compared with the demand and if the country were to become a net exporter of the commodity from its current status of a net importer, the State and Central governments and the Spices Board would have to provide special emphasis to promote its cultivation. The output continued to vacillate between 1,000 tonnes and 2,500 tonnes as against an annual demand of over 20,000 tonnes.
The current crop, harvesting of which is to commence in late January/February, is estimated at around 1,000- 1,250 tonnes because of the continuous rains in recent months, Mr Ramakrishna Sarma, Managing Director, Travancore Rubber and Tea Company Limited, a major grower of cloves in the country told Business Line.
The continuous rains punctuated by occasional sunshine helped healthy vegetative growth, but at the cost of yield, depriving the plants of flowering which is turn has reduced the output by around 50 per cent from the previous seasons estimated 2,500 tonnes.
Non-remunerative prices for long in the past forced several growers to switch over to other crops. No motivating efforts have so far been made to bring them back. Even though the prices of other commodities have gone up significantly, cloves prices are oscillating between Rs 250-320 a kg because of import of poor quality material at low prices from other origins for a long time. “Therefore, the real value of Indian cloves has not gone up for over a decade,” he said.
As a result, growers have switched over to more remunerative other crops bringing down the area under cloves to around an estimated 2,200 ha.
Wednesday, March 02, 2011
What s gonna happen to Black Pepper market in 2011 ? What is the trend ?
The last two weeks we ve been receiving emails from many readers and customers with this question: Whats gonna happen to the market now, near month, the year ?...
After the big rise in 2010 when prices started at U$ 2,800 in January and ended in December at U$ 4,900 a lot of uncertainity clouds over the traders and importers all over the world.
Historically, every year prices start by droping in the beginning - January or February or March or even earlier some years like in 2007 and 2008 - in December, on the expectation of the two of main crops _ India and Vietnam. However India ceased to be an exporter already so the determinating crop became just Vietnam. Nevertheless India became a net importer and a big one - the sort of one that may determine the world export prices with its purchases abroad.
This was what the market expected to happen again this year, moreover because prices are said to have reached historical top heights staying over 4,000 level for more than 6 month.
However this is not happening this season - already in the month of March, new crop from Vietnam arriving slowly but no big change in prices. And the buyers - relutantly - are forced to buy, even small quantities, but they are buying.
We read some weeks ago an analisis saying that USA buyers were covered because of the 2010 imports: "United states of America has imported 52,014 Mts of black pepper compared to 49,148 Mts in 2009 and and 49,626 mt in 2008." see @ Record imports of Black pepper in 2010 Keeps USA Buyers away from Markets 2011/02/17
What this report forgot was that before the crisis of 2007 USA were buying 52.152 mt in 2005 and 55,598 in 2006 and growing at a rate of 3% per year average. Thus, nothing more natural than to start growing again when recovering from the crisis. We consider that these figures do not indicate that market is covered now.
This week the Public Ledger published a report upon consulting leading Pepper operators in Germany, Netherlands, Uk, and Olam people.
A part of minor divergences all of them consider that demand is steady and and buyers are short to some point, trying to delay their purchase to the maximum possible in hope to get better prices when Vietnam will come in full swing. However as one of the interviewed persons say " People have to buy in, they can’t wait longer: they have to book physically the pepper. So if the Vietnamese (prices) are dropping everyone will jump on that like crazy to buy it.” And commented about Vietnam "“If they are able to hold back the pepper they can play this market like they want, because the buyers have no coverage and there are very limited stocks in the pipeline. We are completely dependent on Vietnam.”
Indonesia who played a decision factor in the last two years sems to have no more enough stock to trade the buyers position, thus this year more than ever Vietnam will decide where the Black Pepper market will go.
Vietnam will produce between 100 kmt, - official information - and 120 kmt, according some skilled traders. Possibly even more if we learn for last years. However this makes no big difference as the world economy resumed and production is said to be below the consumption. Vietamese producers, processors and exporters made some good bucks last seasons so possibly they are pretty wealthy this year, with no rush, thus for make cash.
Other point not very much analized is that all prices for any commodity rose in general. The USA Dollar devaluation indicates that the Pepper priced today at U$d 5,000 equals to aproximatelly U$D 2,000 in the year 2000. And, just for the records the avreage price of pepper in 1999 was U$D 4,880. So historical hights is another lulaby. To become true, todaý price should be over U$D 10,000 pmt.
There is room to go, thus...
PEPPERTRADE EDITOR
After the big rise in 2010 when prices started at U$ 2,800 in January and ended in December at U$ 4,900 a lot of uncertainity clouds over the traders and importers all over the world.
Historically, every year prices start by droping in the beginning - January or February or March or even earlier some years like in 2007 and 2008 - in December, on the expectation of the two of main crops _ India and Vietnam. However India ceased to be an exporter already so the determinating crop became just Vietnam. Nevertheless India became a net importer and a big one - the sort of one that may determine the world export prices with its purchases abroad.
This was what the market expected to happen again this year, moreover because prices are said to have reached historical top heights staying over 4,000 level for more than 6 month.
However this is not happening this season - already in the month of March, new crop from Vietnam arriving slowly but no big change in prices. And the buyers - relutantly - are forced to buy, even small quantities, but they are buying.
We read some weeks ago an analisis saying that USA buyers were covered because of the 2010 imports: "United states of America has imported 52,014 Mts of black pepper compared to 49,148 Mts in 2009 and and 49,626 mt in 2008." see @ Record imports of Black pepper in 2010 Keeps USA Buyers away from Markets 2011/02/17
What this report forgot was that before the crisis of 2007 USA were buying 52.152 mt in 2005 and 55,598 in 2006 and growing at a rate of 3% per year average. Thus, nothing more natural than to start growing again when recovering from the crisis. We consider that these figures do not indicate that market is covered now.
This week the Public Ledger published a report upon consulting leading Pepper operators in Germany, Netherlands, Uk, and Olam people.
A part of minor divergences all of them consider that demand is steady and and buyers are short to some point, trying to delay their purchase to the maximum possible in hope to get better prices when Vietnam will come in full swing. However as one of the interviewed persons say " People have to buy in, they can’t wait longer: they have to book physically the pepper. So if the Vietnamese (prices) are dropping everyone will jump on that like crazy to buy it.” And commented about Vietnam "“If they are able to hold back the pepper they can play this market like they want, because the buyers have no coverage and there are very limited stocks in the pipeline. We are completely dependent on Vietnam.”
Indonesia who played a decision factor in the last two years sems to have no more enough stock to trade the buyers position, thus this year more than ever Vietnam will decide where the Black Pepper market will go.
Vietnam will produce between 100 kmt, - official information - and 120 kmt, according some skilled traders. Possibly even more if we learn for last years. However this makes no big difference as the world economy resumed and production is said to be below the consumption. Vietamese producers, processors and exporters made some good bucks last seasons so possibly they are pretty wealthy this year, with no rush, thus for make cash.
Other point not very much analized is that all prices for any commodity rose in general. The USA Dollar devaluation indicates that the Pepper priced today at U$d 5,000 equals to aproximatelly U$D 2,000 in the year 2000. And, just for the records the avreage price of pepper in 1999 was U$D 4,880. So historical hights is another lulaby. To become true, todaý price should be over U$D 10,000 pmt.
There is room to go, thus...
PEPPERTRADE EDITOR
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