The Hindu Business Line : Cloves prices up on lower production

The new Indonesian crop expected in June is said to be only 10 per cent, according to information made available from overseas. As a result, the cigar companies there are buying cloves at high prices, currently ruling at $6,000 a tonne in Indonesia, Zanzibar at $5,500 and Madagascar at $5,200 a tonne.

Meanwhile, crop in Sri Lanka is reportedly at about 3,500 tonne, and of which, India has already imported 2,500 tonnes in the last three months. The stock available there is only 1,000 tonnes which will also find its way to India, trading sources in Bangalore told Business Line. The prices in Sri Lanka have also shot up to $5,300 a tonne from $4,800 a tonne. The price is likely to cross $6,000 a tonne by April once the crop is over, they predicted.

Even though the domestic cloves market was active, buying was at lower levels anticipating that there would be some duty cuts in the 2008-09 Budget. Since nothing of the sort has happened the prices will start moving up, they claimed.

Fixing tariff value

Besides, the Union Government is likely to fix tariff value for many imported spices including cloves on similar lines of poppy seeds. The Central Board of Customs is fixing tariff value for imported spices every 15 days so as to avoid fraudulent and under-invoiced imports, they said.

Export prices of cloves in Brazil have soared by 25 per cent last month, and it is still reportedly on the upward move.

Output lower

According to earlier reports, the global output of cloves is estimated to be lower this year following drop in production in several producing countries. The output in Sri Lanka where harvesting is in final stages is estimated to be around 3,500 tonnes against the earlier projection of 5,000-6,000 tonnes.

Similarly, in Madagascar also it is estimated to be between 1,500 tonnes and 2,000 tonnes against its normal production of 12,000 tonnes.

Zanzibar it is estimated at 1,000 tonnes where the normal output used to be 4,000 tonnes.

Comoros reported to have produced only an estimated 600-700 tonnes, and the entire quantity has been sold out.

In Indonesia, the total production is estimated at 10,000 tonnes, which is around 10 per cent of its total output. Indonesia, which uses a substantial quantity of its cloves in the tobacco industry, is unlikely to have anything for exports, market sources claimed.