Dealers debate extent of next upturn in nutmeg
EUROPEAN spice dealers are divided in their opinions as to how much higher Indonesian mace and nutmeg prices can go over the coming weeks.
One view is that prices are likely to be prone to increases due to adverse weather and a likely pick up in global buying as coverage so far has been relatively low.
Marco Van der Does of AVS Spice Brokers told “Indonesian yields are very small. Estimates we get from origin mention a decrease in crop size of about 40 to 50%. That will have its influence on the price, definitely.”
Harvesting tends to be all year round, but the main bloom starts in February or March and the peak of output is normally around September.
“We can already see that there are not much arrivals of nuts at the moment and the weather during the blooming period was not very good for the nutmegs. That means a lot of flowers will be destroyed and they will not grow into nuts,” Mr Van der Does said.
In addition, the coverage of buyers was quite limited and stocks in Europe and the US were small. There was also a lack of buffer stock in other importing countries, Mr Van der Does observed.
“We are still more or less depending on one origin with only some small back up from Grenada,” he added.
Grenada is still struggling to recover its production after being badly hit by Hurricane Ivan in 2004.
Mr Van der Does felt that current demand was quite favourable. In addition, he suggested that demand was set to increase in line with the start of the US baseball season which brings high offtake of hotdogs, for which nutmeg is a key ingredient.
In Europe, there should be an upturn in demand for the key barbecue season as nutmeg is a popular choice in grilling meats.
Mr Van der Does noted that there was a lack of offers from Indonesia as exporters there were holding back in anticipation of significant increases in price and therefore wanted to maximise their profits.
One UK trader agreed that there was a distinct absence of offers but said he was sceptical as to how much higher prices could go as in his experience demand was down. “I’ve achieved fairly good prices for what I have got, but the quantities have been smaller than what I would have been doing two or three years ago,” he said.
The trader acknowledged that prices had the potential to rise on the reported production problems in Indonesia but claimed that the extent of this upturn would be limited as already high prices had deterred buying in recent months.