Agri Business

Demand-supply mismatch to make cloves costlier

GK Nair Kochi | Updated on March 08, 2018 Published on March 08, 2018

The cloves markets are set to witness a bullish trend as the demand is expected to outstrip supplies with decline in production.

A reported sharp fall in cloves output in major growing countries — Indonesia and Sri Lanka — is said to be creating a bullish trend in the Indian markets which highly depends on imports to meet the demand.

Domestic production during the current season is estimated at 600 tonnes as against about 1,500 tonnes last year, while the annual consumption is projected at around 18,000 tonnes, Dhirish Momaya, a Bengaluru-based importer, told BusinessLine. India remains a net importer of the spice with the country bringing in 17,095 tonnes valued at ₹869.70 crore in 2016-17, according to Spices Board sources.

Unfavourable weather conditions last year coupled with Cyclone Ockhi in December 2017, have hit the current crop very badly. “Harvesting in the main growing region of the country Tamil Nadu’s Kannyakumari district is over last week. The output has fallen to around 15-20 per cent of what we received last season,” said Muthu Subramanian, Secretary, Maramalai Planters Association, in the district.

Output in Sri Lanka and Indonesia this year is also small. The Indonesian production is seen at 16,000 tonnes as against the usual output of 80,000 tonnes. Similarly, the Sri Lankan output is at around 5,000 tonnes, Dhirish said. Indonesian Cigar companies which used to absorb huge quantities are reportedly buying from other origins, he said.

Consequently, a mismatch in demand and supply is likely to emerge this year globally creating a bullish trend, he said.

Madagascar is, in fact, the only supplier and in the international markets the prices were in the range of $7,500-8,000 a tonne, while in the domestic markets the prices are likely to shoot up to ₹700-750 a kg, he said.

Published on March 08, 2018
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