The Hindu Business Line : Cloves price may rise on delay in Brazil crop

Kochi, Dec 25 Cloves market in Brazil, one of the main global producers of the spice, has remained quiet for want of demand, according to Brazil Pepper Trade Board (BPTB).

However, in recent days “possibly 600 to 1,000 tonnes of the commodity were traded at an average price of $4,000 a tonne (f.o.b), most of it without stock coverage as the cloves are arriving to the market only now,” BPTB sources said.

Cloves in Brazil are harvested during rainy season in Bahia which makes drying of the product tough. The drying system in Bahia is under a metallic roof and some sunshine and heat is required. As a result, the moisture content in Brazilian cloves is officially accepted at 16 per cent, they claimed.

“The production is delayed and we believe that first lots will not be ready for shipment before January 15,” they said.

Default likely

Despite exporters having paid growers in advance for their produce, the latter are holding back the stocks in the garb of drying it. This gives the growers an opportunity to default delivery, leading to rise in the prices, they said, adding: “This is exactly what is happening at this moment”.

Some defaults could be expected on booked contracts as well as a sharp rise in prices from beginning of January, they said.

It has already been reported that the cloves output in other major producing countries next year is likely to be lower and as a result, there would be a demand and supply gap. Consequently, prices are expected to shoot up.

The Indian production is less than one-fourth of the country’s requirement and hence it is dependent on imported cloves.