Indian cardamom prices seen declining on extended harvest

INDIAN spice traders are expecting declines in prices of the country’s cardamom in the coming weeks as farmers release stocks on fears of an extended harvest season.

A report in The Financial Express said that following a slow down in February, arrivals had increased at the auction centres as farmers released more cardamom into the market. Good summer rains in the producing regions indicated an extended cardamom harvest, traders said.

P C Punnoose of the Cardamom Processing Marketing Company in Kumily, told the newspaper: “Farmers were holding stocks expecting prices to move up. Now they realise that the prices may come down as demand wanes from North India. They are selling more cardamom.” As a result, prices had dropped below Rs1,000 ($21.97) per kg and were facing downward pressure, he added.

On Tuesday, the average prices declined to Rs893.57 per kg from Rs959 a kg on Monday. Indian cardamom prices reached a record high of Rs1,950 to Rs2,000 per kg in June 2010 due to a global shortage driven by lower production in Guatemala. Imports from Guatemala, which tend to depress the domestic market, have been low in the last two years, The Financial Express reported.

Indian traders fear that demand might decline from up country buyers during the peak of summer. High prices and problems in west Asia have compounded the problems faced by exporters.

“We might see continuous arrivals of cardamom as we go for an early harvest of the new crop. Earlier cardamom supply used to be restricted to eight months,” Mr Punnoose said. Rains in the cardamom growing regions of Kerala revealed that there would be an early crop for the next season, he said.

“Good rains in the coming days might result in the new crop coming by June. This might upset the stock and availability,” Mr Punnoose added.

Auctions for the new crop usually start in August after the monsoon break taken by the auction centres.

K Satheesh Babu of Agricultural Market Intelligence Centre of Kerala Agricultural University said: “Speculators have taken over the entire cardamom market. Spot price at Puttady and Bodi e-auctions are determined by the futures price.”