The Hindu Business Line : Clove prices turn dearer on short supply

Sellers have withdrawn as the demand has started surging, traders in Mumbai and Bangalore told Business Line. According to them, Indonesia is buying from other origins, while its cloves prices ranged between $6,500 and $7,500 a tonne. Zanzibar has quoted $5,500, Madagascar $5,200, Comoros is said to have sold out its crop. Colombo traded at $5,700 a tonne. Crops in all the producing countries are reportedly small, they claimed.

In Brazil, too, cloves are priced at $5,200, as Indonesian cigar companies' agents are just buying all cheap cloves available in the world, they said.

Imported cloves of different origins, depending upon quality, are sold at Rs 310 a kg (Colombo), Rs 325-335 a kg (Zanzibar, Madagascar), and Rs 350 (India).

Real value still flat

The output of cloves in India this year by conservative estimates is 15-20 per cent higher at 2,000-2,500 tonnes, said Mr Ramakrishna Sharma, Managing Director, Travancore Rubber and Tea Company and a producer of cloves in the country. He said the harvesting will commence from December-end and may last till March.

Non-availability of skilled workers has become a major problem, of late, he said. He said that for the past one decade Indian cloves were not getting remunerative prices because of import of poor quality material at low prices from other origins. "Therefore, the real value of Indian cloves has not gone up for over a decade," he said.

The demand for cloves could expand significantly if its medicinal values and usages are properly studied and promoted, he said. "But, from the treatment so far meted out to this crop one can reach the conjecture that it is being neglected by the Central and State governments and the Spices Board," he said. Therefore, the area under the crop has increased marginally so far.

Mr M. Subramanian, Director of Sri Alagappa Estates (Nagercoil) and Joint Secretary of the Clove Growers Association of India, and Mr Renju Thaliath, a planter in Kerala's Kollam district - both major growers of cloves - shared the views of Mr Sharma.

Depressing the markets

According to the traders/importers, some were allegedly importing cloves mainly from Zanzibar under-invoicing the consignments to deprive the government of the revenue and depress the market here. "If such activities are checked and arrested the prices might move up to Rs 400 a kg," they claimed.

Colombo crop, which comes in November-December, is reportedly small and estimated at 2,500 tonnes only. The harvesting is expected to be delayed and hence the new crop will start landing at the Indian ports only from January 15 and till "then the Indian market will be on fire", said market sources.

Upward pricing

Price of Madagascar's new crop has shown an upward swing as the output is projected to be less this year. The exporters in the country were quoted by the Public Ledger as saying that the new crop will be around 3,000 tonnes as against its normal crop of 10,000 to 12,000 tonnes. "In particularly good years, Madagascar has seen output as high as15,000 tonnes," it said.

According to Spice traders in Rotterdam upward pricing pressure is likely largely due to this year's poor Madagascar crop. "People will need to start buying just to get a good view of the price. If the buying starts you always see at what level people are willing to let cargo go," they were quoted as saying.

"Quantities left unsold from this year's Comoros crop have nearly run out. Brazil's crop is said to be around 4,000 tonnes compared with 5,000 tonnes in 2008, and there have been reports of prices being almost as high as those from Madagascar," the Ledger said.

According to the Public Ledger, India has remained absent as a buyer, of late, but, a trader was quoted as saying when they see that prices are surging upwards, Indian dealers might all rush in at the same time to cover their requirements. "This has happened in the past and if it occurs now the end result is likely to be another sharp upturn in prices," he predicted.

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