Commodities

Spices trade fears second Covid wave might turn demand insipid

V Sajeev Kumar | Updated on April 06, 2021

Kerala’s spices trade – especially pepper and cardamom – are keeping their fingers crossed over the second wave of Covid in many upcountry markets. They fear that the emerging situation may translate into a subdued demand in the event of a possible lockdown in these regions.

Most of the traders shared the view that the state of affairs has come at a time when prices especially for pepper are ruling high at ₹386, while cardamom is eliciting a good export demand from Gulf nations ahead of Ramadan festival.

Cardamom traders are quite worried over the possibility of a re-imposition of lockdown, which would force buyers to abstain from the market to a certain extent, a trader in Vandanmedu told BusinessLne. “Any further restrictions and announcement of containment zones is likely to hinder the movement of goods which will be detrimental to the trade,” he said.

Kishore Shamji, a pepper trader in Kochi pointed out that Maharashtra and Gujarat markets have already started witnessing a subdued demand. “We have to see how the situation is going to affect other states in the coming days. If the virus spread is higher, there may be a temporary pause on demand,” he said.

The spiraling pepper prices have forced farmers to hold their current stock to some extent and therefore the arrivals to the market were less. On an average, the auction trade platform is getting 25 tonnes per day, which is mostly the imported stuff from Sri Lanka, Shamji said.

The trade was expecting more pepper arrivals to the auction platform, thanks to the on-going harvesting season. But the offered quantity since February 13 to till date was up to 1,077 tonnes. Lower production and holding back of the crop by farmers due to higher prices can be cited as a reason for fewer arrivals.

The market, he said, is also witnessing a good industry demand for green pepper in vines especially from European countries at a price range of ₹180-200. This was also a contributing factor to lower arrivals of black pepper to the auction.

Besides the Covid concern, PC Punnoose, Managing Director, CPMC Ltd said the financial health of cardamom trade is negative in 2019-20 and 2020-21 as the two seasons were not at all trade friendly due to severe price volatility. Thanks to an export demand ahead of Ramadan, 7 to 8 mm grades are fast moving in the market and fetching a price tag of ₹1,700 plus.

However, the prices of institutional buying segments such as split and rejection materials have remained flat and are hovering in the range of ₹1,000 per kg. It has also witnessed a price drop of ₹500 after Pongal festival season, he said.

Anu V.Pai, Commodity Research, Geojit Financial Services Ltd, said cardamom may stay under pressure with production seen higher this season. Yet, festival demand and reports of lower output from Guatemala is seen lending support.

Pepper is likely to correct after the recent rise on higher production expectations and on global cues. Higher global carryover stocks globally may weigh on as well. However, robust demand for the commodity may lend support, limiting losses. Market estimates pepper production in India to be at 60000-65000 tonnes in the current year, she said.

Published on April 06, 2021

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