The Hindu Business Line : Sharp fall in global cloves output may push up prices

Set to peak
The availability from Brazil and African producers is likely to be limited.
Inventory in the world markets is almost empty and prices are likely to soar to over $6,000 a tonne in the coming weeks.

G.K. Nair

Kochi, Dec. 18 Sharp fall in production of cloves in almost all producing countries in the world where harvesting is either under way or is to take place early next year, is likely to push up prices to higher levels in the coming days, if the traders’ estimates turn out to be true.

The price, at present, is reportedly between $5,200 and $5,400 a tonne, a Bangalore-based dealer told Business Line.

The output in Sri Lanka, where harvesting is to take place next month, is estimated to be around 2,000 tonnes as against the earlier projection of 5,000 to 6,000 tonnes. Similarly, in Madagascar also it is estimated to be between 1,500 tonnes and 2,000 tonnes as against its normal production of 12,000 tonnes. In Zanzibar, it is estimated to be 800 tonnes where the normal output is 4,000 tonnes. The prices quoted here is $5,400 a tonne. Comoros is reported to have produced only an estimated 600 to 700 tonnes and the entire quantity has been sold out.

In the world’s largest producer of cloves, Indonesia, where harvesting is in March/April, the total production is estimated to be only 10 to 20 per cent of its total output at 15,000-20,000 tonnes. Indonesia had a bumper crop with a total production of around 80,000 tonnes. The price quoted at present is $4,900 a tonne. Indonesia, which uses a substantial quantity of its cloves in the tobacco industry, is unlikely to have much for exports, the dealer said.

According to the Brazil Pepper Trade Board, harvesting in Brazil has been delayed. Usually, December is the peak time for harvesting “but this year it has just started. It looks like big shipments will happen from January onwards”, it said. Meanwhile, speculation is rife on the rise and price talks are far above $4,400 already, even with no merchandise available, it added.

A sharp fall in the world production of the commodity has pushed up its prices in the international market and expectations are that it might cross $7,000 a tonne next year, as the availability from Brazil and African producers is likely to be limited, trading sources here said.

They said the inventory in the world markets is almost empty and, as a result, prices are likely to soar to over $6,000 a tonne in the coming weeks.

Cloves production in India continues to remain far below the requirement, making India a net importer of the commodity. “Stocks in the country are limited. The indigenous production is estimated to be somewhere between 1,000 and 2,000 tonnes”. It is grown in Kerala’s Idukki and Kottayam districts and Kanyakumari district of Tamil Nadu and in some parts of Karnataka as intercrop. The total demand in the country is estimated at between 8,000 tonnes and 10,000 tonnes.

The total import of cloves during April – October 2007-08 stood at 3,610 tonnes valued Rs 44.33 crore as against 2,881 tonnes valued at Rs 53.97 crore in the corresponding period last fiscal. The unit value during the first seven months of the current fiscal was at Rs122.80 a kg compared to Rs 187.35 in the same period in 2006-07.