REPORTED JUNE 2, 2024 - CLOVE - 2024 - NEW SEASON UPDATE

Madagascar Cloves season is about to begin and so is Brazil.
Therefore we find it very usefull to recall this report below, written in June but still very valid.

CLOVE - 2024 - NEW SEASON UPDATE.

Mutsamudu, Anjouan, Comoros, 1st June, 2024:-

The new season of Clove 2024 is about to begin.
Starting with Comoros Islands in June 2024, [June, July, August is the prime season in Comor Islands, shipment might continue up to October-November] followed by Indonesia in July & August 2024, continued with Zanzibar also in July and August, and Tanzania [Tanzania is not a big name internationally] in August September, and in Madagascar harvest starting in August and trade season in October-November - so the 2024 Clove season is on the verge.

So what is in the basket this year ? Quantity estimation and price expectation ? And how would be the demand ?

Even now, isolated enquiries and demands are in the market. Buyers in India and few Arab countries waiting to buy at around USD 8400-8600 levels ! Meaning there by, demand is still there - but just waiting for price suitability. Even though the historic concept of DEMAND AND SUPPLY should be the main factors to decide price, Clove has grown a step ahead, and only this economic factor cannot fix Clove price anymore. Clove market is witnessing too much of speculation, too much of forward selling, and equal size of market making and cycle trading as well.
Meaning thereby, price levels are created manually by these market phenomena.

Comoros, and Zanzibar, are estimated to be at normal and regular quantity in this season also ranging between 2500 Mt to 3500 Mt. Both these countries together would have roughly 6000 to 6500 [anyway less than 7000 Mt] only. And Comoros domestic market just started with a reasonably good average price level - not much below nor above the expected levels ! It is good for the market as well. I will comment on the existing price levels in origin countries in my next blog by mid of June. It is too early to declare the origin price levels.

Indonesia started at USD 9200 level, but now eased down to USD 8700-8800 level on forward offers for July shipment. Indonesia is expecting a crop size of 80,000 Mt in June to August harvest ! which is not a big crop for Indonesia. However, the slow pace of intake by the cigarette industries and very cool demand in the domestic market in Indonesia points to a lower priced market only to come up. Even if Indonesia enters the international market to import, [if so happens], there is enough stock ready available waiting Indonesia orders in Singapore and Dubai. No shortage of stock even if Indonesia imports now. Therefore, we cannot expect any surge in price even if Indonesia imports.

This year Madagascar would have good crop, a size better than last year, because of good weather, and more trees for first harvest. Cultivation is increasing in Madagascar year on year, and new area is becoming ready for first harvest every year. This would keep on Madagascar crop size in normal terms. New Season harvest would start from South Madagascar during first half of August, however, trading would begin only by end September-October. And in Madagascar, issue of Clove Export Permit to be waited to commence the trading and export season.

Based on present market intelligence and information, more than 6000 Mt Clove available in Singapore and Dubai; and roughly 3000+ Mt is available in India, which is ample to meet any demand during this off season. And new crop shipment would start with Comoros by end June or July.

TAIL END:- During March 2024, there was too much expectation around the world that after Ramdan, Clove price would shoot up to USD 10,000 level and many sellers stayed back with their stock to see these price to come. Sellers and exporters in Madagascar also spread domestically that farmers would get better price after Ramdan. My readers would recollect that in my March and April blogs, I wrote without doubt that, fundamentally and technically no chances for price to move high; there was no basic reason to expect such increase in price.

Today also my view is that clove price would continue at the average level only; no reason to go do
n much; nor any chances to move very high. Historic levels cannot repeat this year. No ground for that. Ideally one should anticipate USD 7000 to USD 9000 is the range where Clove would be traded.
Any market making or speculative market creation can make some impact for a short period, but that cannot take on the market price for very long time. It would be only a temporary phenomenon, which is now common in the commodity market.
Wish you all a happy reading and wait for next blog by mid June with price indications.