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.

CLOVES MARKET REPORT MAY 31, 2021

 

JUST GOT THE REPORT BELOW PRODUCED BY ROYAL GOLDEN CO
FOUND IT VERY SERIOUS AND USEFULL THEREFORE WE ARE POSTING IT FOR YOUR INFORMATION

Author: Parsram Dhirani

A few months ago, we have heard vague news of lower output of Indonesian cloves which have now turned into a reality.
It resulted a spike in prices by 20-30% in a span of 2 weeks.

Indonesia experiencing one of the bad crop seasons due to excessive rains for the last several months (up until now).
Small islands are reporting crop size as low as 25%, while the arrival at big island is negligibleand several news of 50-60% crop damaged at big and major cloves producing islands.

Jawa Island normally has its crops in May - July, however, this year, there has been no report of new cloves in the producing regions. Even though cloves from Jawa are mainly for the consumption of cigarette companies, bad output from Jawa adds more pressure to the cigarette companies to buy whatever cloves are available in the market, including the Lal Pari cloves which are usually for export.

Realizing this dreadful fact of lower output, large and medium kretek companies introduced a high opening prices to procure material as much as possible.
However, traders and farmers who are very aware of the situation declined to supply at their asking levels.
This made factories increase their prices more.
Many farmers and holders prefer to hold for better prices in coming time.

India which is the second biggest consumer of cloves is facing extreme difficulty in finding replacement at lower levels.
Hence, prices at spot market are rising on daily basis.
Three to five months more of supply vacuum at destination markets such as India and elsewhere may result more hike in spot prices.

Crop of 3000-4000 tons from Comoros Island shall start in the month of July.
According to sources, Chinese who sold their excess stock from China to
Indonesia and Singapore are now very active in Comoros market to procure as
much as possible in the beginning of the season.

Zanzibar produces 4000 tons, and we may see similar number this year as well
in July. We do not have more information except some issues on quality of
cloves last year and those disputes remain unresolved .

A very small remaining quantity of Brazil cloves is being offered in the range of
8500-9000. Their new crop shall start in November/December.

Sri Lanka is at end of their crop and has quickly adjusted their prices with the
international levels.

Madagascar may bring some relief in supply (not necessarily in prices) when
they harvest their new crop in the month of September/October. At this stage,
crop is expected to be decent.

Observation & Analysis

*There is no major source of supply of cloves till Sept/Oct.

*Spot prices at destination markets or centers may rise further till lower prices cargo arrives.

*Other less consuming markets seem to be very active as well.

*Speculative activity is also pushing prices to some extent.

*However, this time, it is more of an economic theory of supply and demand that is playing its
role to bring prices at equilibrium levels.

*In 2011, due to lower production in Indonesia, market touched historically high and Indonesia bought cloves from many parts of the world.
2021 crop is substantially and sharply down as well.

Can 2011 situation repeat itself in 2021?