The Hindu Business Line : Poor weather may hit global clove supply

Kochi, Oct 15 A tight supply position is likely for cloves in the world market as output in several producing countries may decline due to unfavourable weather conditions.

Output in Zanzibar, which normally produces 4,000 tonnes, is reported to be as low as 800 tonnes, while in Madagascar it is reportedly 3,000 tonnes as against the usual production of 12,000 tonnes. Situation is Comoros is also not different, industry sources told Business Line.

Indonesia this year reported a normal crop. But 80 per cent of it is absorbed by the tobacco industry, leaving only 20 per cent for export. The prices currently quoted by Indonesia are $3,600-3,800 a tonne. However, its next crop, for which harvesting will begin in March 2008, is likely to drop owing to excessive rains. The estimated output is 40,000-45,000 tonnes.

Indian demand-supply

Sri Lankan crop will come in January 2008 and is reportedly lesser than the previous year, they said. Its producers are reportedly quoting $5,000 a tonne. Much of the Sri Lankan produce lands up in the Indian domestic market through the free trade route.

In India, as against the demand of 12,000 tonnes the production is over 2,000 tonnes. Farmers here had cut down trees when prices were at rock-bottom about four years ago. Now in certain areas, growers have planted clove ever since prices shot up during the past couple of years. The new plantations would take 2-3 years to yield. It is mainly grown in Kerala’s Kottayam, Pathanamthitta, some parts of Ernakulam and Thiruvanathapuram districts and Kanyakumari district and Shenkotta region of Tamil Nadu.

Most of the domestic demand is met by imports. According to trading sources, the current price ranges at Rs 240-250 a kg.

As the inventory held by dealers is expected to last only for two months, prices are likely to move up to Rs 275 a kg and even beyond. The major trading hubs for cloves in the country are Delhi, Mumbai, Pune and Hyderabad, they said.

Short supply in 2006 had led to a sharp rise in the prices of the commodity at all the origins. It had touched $6,000 a tonne in Indonesia as the output was lower that year. Similarly, Madagascar cloves were being sold at $4,800-5,000 a tonne.

A Kochi-based trader predicted that world markets would face squeeze in supply and that could easily push up the prices in 2008 to touch $6,000 a tonne.

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