Cardamom prices under pressure

C. P. Krishnan
Comment (1)   ·   print   ·  
Cardamom kept for sale at a retail outlet in Kochi
The Hindu Cardamom kept for sale at a retail outlet in Kochi

A month-long losing streak in cardamom prices have almost paused for the time being. But prices are still trading well below its recent peak of Rs 1,500 a kg. Since the start of August, prices continued to hit lows and dropped to Rs 707.40/ kg last week. Prices lost almost 50 per cent in the futures platform during the period.

Earlier, unexpected rain in the initial stages of South West monsoon raised worries over crop output and lifted prices from its life time low of Rs 545/ kg to one and half year high of Rs 1,508/ kg.

Higher arrivals in major spot markets, carryover stock, sluggish domestic and overseas demand and conducive weather conditions in major growing areas are the key factors influencing the ongoing weak momentum.

Major spot markets are currently reporting high arrivals due to sufficient carryover stocks. Last year, growers had a bumper crop but subdued demand prompted them to hold back their produce for next season. In 2011-12 harvest, India had a record output of 18,000 tonnes according to official records while traders say it is around 22,000-25,000 tonnes.

According to Spices Board records, Indian export accounted for more than 1,500 tonnes in the year 2011-12, well above the average annual exports. In these situation too, growers are maintaining high carryover socks. About 60-70 per cent of crop coming to the market in this season consist of produce from the previous crop.

Adding to this situation, the MCX accredited warehouses are reporting high stocks compared with same period last year. Moreover, the high demand oriented 7-mm cardamom production is comparatively low in India against the 6-mm capsules which are in low demand.

Easing concerns

Prevalent climatic conditions in major crop producing areas have eased concerns of lower output. Previously, growers were worried about the delayed monsoon and high temperature in the major production belt and estimated a crop loss of 40-50 per cent. Dull festive based demand and subdued offtake from pan masala/ gutka manufactures are the other reason for such liquidation in prices.

Since, no major festivals are in line during these periods, only lacklustre buying is reported from confectionary and baking sector.

As a vital food ingredient, cardamom typically accounts for higher demand during the festive season. However, demand from pan masala/ gutka manufacturing sectors is notably lower after the ban on such products. Gutka manufacturer’s purchase of inferior quality cardamom was estimated around 2,000 tonnes in a year.

Overseas buyers prefer cardamom from Guatemala due to its superior quality and good price advantage. Guatemala is the world’s largest producer and exporter of cardamom.

On an average annual basis, Guatemala exports around 25,000 tonnes of cardamom. Reports say that Guatemala will maintain high production in the current season too.

Additionally, as per recent reports, India is facing stiff competition from African new comers like Nigeria and Ethiopia, which have started planting cardamom in a big way. However, export demand remains sluggish as overseas stockiest are having high carryover stocks. Meanwhile, in this worst case scenario, Indian exports to Middle East countries were reported higher just before the period of Ramadan. Even then market participants expect a good export demand from Europe and the US before Christmas and New Year. Proportionate rise in domestic buying is also anticipated before Diwali fever kick starts.

Amid these feeble fundamentals, enduring weak bias could probably suffocate prices inside Rs 1100-850 per Kg regions on MCX futures platform for short term period. But, restorative rallies are highly anticipated by growers due to a possible change in weather pattern which they presume has affected 50 per cent of the output.

(The author is Whole Time Director of Geojit Comtrade Ltd. The views are personal)

(This article was published on September 22, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.


Cardamom"the queen of spices" is ruling high in domestic market at Rs 1500/kg.The fficial
estimate of 18000tones and trade estimate of 20000-22000 tones are only gestates in view
of shortage in the market.Guatemala with 90-100 percent of productionexported and new
producing countries emerging-Ethiopea and Nigeria-,Indian cardamom export (1200 tons in
2011-12) is facing challenges.The high domestic price is not sustainable with lower quality
getting entry to India third world countries or through neighboring countries like Sri Lanka
and Nepal.What is now required to increase productivity and emphasizing on restricted use
of pesticides and fungicides to manage koke kenthu,Katte,and rhizome weevil.The pristine
cardamom reserves in western ghats need to be preserved.The Cardamom Research
Centre at Appangala and Indian Cardamom Research Institute at Myladumpara may
organize front line farm demonstrations to showcase technologies to growers at growers

from:  Dr K V Peter
Posted on: Sep 23, 2012 at 13:00 IST
This article is closed for comments.
Please Email the Editor



Recent Article in Portfolio

Cash crunch Some firms are unable to meet interest costs SHUTTERSTOCK.COM

Squeeze on short-term funds

With money locked into projects, some firms are struggling to meet their day-to-day needs »

Comments to: Copyright © 2014, The Hindu Business Line.