The Hindu Business Line : Indonesian clove prices soar to $6,200/t

Kochi, Feb. 8 Strong Indonesian domestic demand coupled with short supply in the world market appears to have pushed up the cloves prices in the world market. High speculation is also said to have contributed to the upsurge.

According to overseas reports, Indonesian cloves were quoted at $6,200 a tonne c&f Singapore last month against $4,100 a tonne in late December. During mid-December to mid-January, cloves of Madagascar origin were reported to have touched $5,000 a tonne compared to $4,450 a tonne earlier. Quoting a Bangalore trader, The Public Ledger has said that Indonesia’s major cigarette companies Gudang Garam and Samporena were purchasing cloves at higher market prices to cover local demand. Also, according to the same trader, it said, local prices in Indonesia were as high as Rp60,000 a kg, equating to $6,200 a tonne f.o.b. Surbaya. Moreover, the trader added that his company had purchased Indonesian cloves at $5,700-$5,800 a tonne last month.

Madgascan origin

The Bangalore trader, the report said, viewed Madagascan cloves as being quoted higher than the indications from European traders, citing instances of offers at $5,500 a tonne f.o.b. Tamatave. The Public Ledger also quoting a French trader said that strong buying by Indonesian cigarette companies was pushing up prices. In addition, some Indonesian speculators were sitting on stocks. The weakness of the US dollar was also lending support to prices, it added. Indian buyers were said to be not covering huge quantities at the current level.

Speculation

Reports said that the latest increase in prices was steered by speculation, which is based on the assumption that increased buying in Indonesia might result in a squeeze in availability at a time when the next crop is projected to be less.

Add to this there is said to be no sellers in Madagascar which indicates of a tight supply position in the island nation, a major producer of cloves.

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