Clove prices soar in Dec on short supply in global market

Chennai, January 13: | Updated: Jan 14 2002, 05:30am hrs
An unprecedented tight supply both in the domestic and international markets has seen clove prices peaking to new heights in December 2001. Trade sources here feel that the prices would go further up unless fresh crop arrives in the market.

According to the latest figures available, the average price of clove in the terminal markets of Chennai and Kochi peaked to fresh levels during the month under review. In Chennai, prices of clove hovered around Rs 550 per kg and Rs 560 per kg, while in Kochi prices were ruling between Rs 570 per kg and Rs 575 per kg.

Last year during the same period, average price of clove in the domestic market was low at Rs 310-325 per kg.

Industry sources said short supply of the commodity both in the domestic and the international markets has seen prices flaring up. It is feared the prices would go up further unless there is a fresh arrivals in the market, the sources pointed out.

They said, the shortage of the commodity in the international market is because of the non-availability of Brazilian cloves apart from the expectations of a crop failure in Indonesia. This has resulted in sharp increase in prices in the international markets.

“Crops in Brazil have completely exhausted due to huge exports. Cloves, which were priced earlier at $5,400 (FoB), are now being traded at $7,400 at Singapore. The prices are expected to go up further to $9,000 during the next couple of months. Increased prices have resulted in farmers in Brazil defaulting on forward contracts,” the sources said.

Similarly, Indonesian crop this year is expected to be bad leading to a further shortage. “Farmers are expecting the production to be less by about 35,000-40,000 tonne during the next season. This situation is expected to push the prices up to $9,000 per tonne in the international market during March-April, when India and Indonesia comes to the market for buying,” one source said.

However, the situation is expected to favour Sri Lankan planters who are holding back their stock hoping for further increase in prices. The sources said, “Currently there is a slowdown in the Indian buying of Sri Lankan cloves because of the non-availability of the commodity in the market as the stock is being hoarded by Sri

Lankan planters,” another source said.