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Cardamoms may be set for price increase

CARDAMOM prices could be set to rise in the coming months amid strong demand and the possibility of a smaller crop in Guatemala.

The new crop in Guatemala, which begins this month and runs through to around April next year, could decline to around 24,000 tonnes, compared with around 28,000 tonnes in the season just ending, according to one Rotterdam trader.

“The new crop in Guatemala had been expected to be similar to last year although there seems to be fungus again, which could bring the crop down by 20%,” he said.

“Prices have been stable for the last two months, we’ve not really seen any changes,” said the trader, adding that prices had already fallen from around March this year to July. “Prices came down mainly for the lower grades like the MYQ and mixed green. But the higher grade whole greens didn’t come down too much because there was less available after the Guatemalan crop suffered from fungus.”

For jumbo whole green cardamom the trader indicated a price of $15 a kg c&f, medium greens at $14 a kg c&f and small greens at $13 a kg c&f.

“We’ve noticed increased demand recently, especially over the last three or four weeks. From the end of August up until now the market on the demand side has been quite good because stocks are almost empty and need to be replenished. Also, prices were seen as attractive especially with the downgrades we’ve seen over the last couple of months. More buyers are prepared to step in and cover their positions before the new crop starts.”

The trader said that the increase in demand has mainly come from Europe, while the Middle East has “not been that active yet”.

“In the Middle East I think they are still waiting to buy from Guatemala. But they will have to cover, so probably in the next four to six weeks we can expect some more activity from there. But the Middle East has been more active in India because last year it had a bumper crop. They will prefer to buy from India as long as the price is more competitive than Guatemala,” the trader told.

This year Indian output should drop by around 30%, according to the Rotterdam trader. “But it will still be a good crop,” he remarked.

Andrew Barker, managing director of PBA Brokerage, said: “Prices have been very stable. New crop prices have opened at the same price as they were two months ago. There is almost no difference at all. People were expecting prices to come down a lot because the crop was going to be much bigger. I think people are expecting to get really cheap material but it’s not that cheap.”

In early March Mr Barker correctly predicted that over the next four to five months cardamom seeds and mixed yellow quality from Guatemala and India would fall in price on ample stocks ( , March 9, 2012).

For the last four years a lot of speculators have involved in the cardamom market with prices at record high levels. The trader said that the market in recent months has been driven more by supply/demand than speculators, something that should continue to be the case for the rest of this year.

“We don’t expect speculators to enter into the market very soon but you never know. It’s unpredictable. If prices hit very low levels it could make speculators interested again,” observed the trader.

The trader said he is bullish for cardamoms for the rest of this year and into the start of 2013. “For the greens we can expect some rise in the prices. It depends on the situation in India. If India is capable of filling the demand partially then the price in Guatemala will also increase that much. But if India can’t easily fill the demand then the price in Guatemala will go up to the levels of India. In that scenario we could expect the price for jumbo greens at $18 to $20 a kg c&f.”

Indian spice dealers are expecting strong domestic demand for new crop cardamom to help underpin prices of the spice.

In an August 30 market report Emperor Akbar Green Cardamoms of Mumbai said that domestic festival demand would start in a few days and this would coincide with new crop arrivals. “Most of the domestic consumption centres and the supply chains are currently carrying very little or negligible stocks. Hence, we expect the domestic demand to give good support to the new crop,” the company stated.

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