Exporters are set to scramble as the local cassia market shows signs of panic on the supply side in Kerinci, Indonesia, according to a report from Cassia Co-op.
The company explained that the cost of raw material barks went up IDR1,000/kilo (USD0.083) in the week to September 12. Some exporters predict it will jump another IDR3,000/kg in October/November, it added.
“There is a noticeable shortage of harvested cassia in Sumatra, therefore exporters must compete with each others to grab the lots available. Some dealers need to cover current contracts but others speculate on another potential cost/price jump,” the report noted.
However, the local increases in Sumatra are not reflected in the current end-user markets of the US or the EU.
“There is conflicting information on opposite sides of the supply chain – exporters and users – which makes communication and pricing difficult on the short term. Eventually, both markets should get in tune. We have not identified yet if the current squeeze at origin will be short lived or if it is more deeply rooted. At this stage it is everybody’s guess,” the report concluded.