The domestic cloves market is quiet now and is expected to get active by April when demand usually picks up.
Currently, there is also scarcity in the market as some speculator-operators, who are holding huge stocks of cloves bought at Rs 1,100 a kg earlier, are not releasing stocks now as the prices are ruling below this level, and are waiting for the demand to pick up from April amid limited availability and a consequent price rise, market sources said.
These operators, they alleged, might try to block imports too. “Prices will increase only after April — it may touch Rs 1,500 a kg as there is very limited stock available in other origins because of poor crop and at the same time sales will start here from March-end/early April pushing the prices up,” a source said.
Demand for cloves, according to the trade, picks up from April to December, when the ‘masala season' begins, sources said. The Indonesian crop is also small this season. But once the cigar industry starts buying, that will hugely impact the world market because the demand is so high. Then, the prices might go up to even $25,000 a tonne, they claimed.
Colombo's crop has failed and it is estimated at around 500 tonnes. Usually imports from Sri Lanka start from January. Lack of Colombo cloves might force Indian importers to look for other sources, they said.
All the crops in Madagascar, Comoros, Zanzibar and Brazil are reportedly sold out. Brazil quoted $16,500 a tonne (f.o.b).
International markets, according to the trade, are at $12,000 to $16,000 and as a result import costs are high. Cloves will soon touch Rs 1,200-1,500, as there are no fresh imports, they claimed. Big investors are expected to enter the markets in April with substantial demand, they said.
The current Indian crop is going to be low, said Mr M. Subramanian, a grower in Nagercoil (Tamil Nadu). “Every alternate year, we used to get bumper cloves crop but the current one is going to be somewhere between 60 and 70 per cent [of the usual crop] due to multiple factors,” said Mr Subramanian, who is also the Joint Secretary of Cloves Growers Association of India.
Contrary to expectations, the crop is estimated to be some where between 600 and 800 tonnes, he said, instead of the usual 1,000-1,500 tonnes. Consequently, the total availability of indigenous produce this year is likely to be around 1,500 tonnes, he said.