Rains lead to upturn in cassia prices
Indonesian cassia supply flows have been hampered of late by persistent rains in origin, exerting upward pressure on prices.
In a November 25 report, Cassia Co-op observed that it had been raining every day since October. “The lack of sunshine is the main bottleneck for the entire supply chain of Indonesian cassia, the company noted. “Farmers and collectors have a hard time to dry their barks and bring them into the market. This moist environment is also conducive to fungi. So not only are the barks late to be delivered but they also contain a higher than usual moisture level. Basically, until the sun is back for good, the supply will move in slow motion in Kerinci.”
The report explained that as a result of this situation Indonesian cassia prices had continued to rise “slowly but surely” since October. “We feel that the pressure on price comes from the lack of product available in the pipeline due to the lack of sunshine… a domino effect that puts pressure on exporters who must compete and pay premiums for the limited supply at the source,” it added.
Cassia Co-op also felt that political developments needed monitoring. The election of the Bupati in Kerinci had been tainted by fraud in two districts so another round of voting was scheduled in the area on Thursday to settle the issue. The company recalled that the past local election had created some disruption with cassia farming because of all the rallies organised during August and September. However, on this occasion it did not see any disruption “so we confirm there should be no impact on cassia output”.
Cassia Co-op revealed that Indonesian cassia farmers seemed to increasingly appreciate the opportunity to sell their raw material directly to the company, thereby bypassing the local collectors. “This creates more buying opportunities for Cassia Co-op while building the social fabric between the company and the farmers. It is a very encouraging sign for Cassia Co-op and proves that setting up in Kerinci was the sustainable way to go,” the company added.
Indonesian customs data shows Indonesian exports tailed off in June and July, but had been running at a decent pace when compared with recent years prior to that.