Low demand, production fall hit cardamom rally

Written by RajeshRavi | Kochi | Updated: Dec 29 2012, 07:54am hrs
Cardamom prices are feeling the pinch due to lower arrival of the commodity in the auction centres. Traders expect the market to rally higher in the coming days due to lower production and negligible stocks in the supply lines. India is the second-largest producer of cardamom in the world with an annual production of 12,000-13,000 tonne.

Production is down by 50% when compared to last year. If not for the sluggish demand from north India, the market would have moved up higher, PC Punnoose of Cardamom Processing Marketing Company (CPMC), Kumily, told FE. Severe winter is hampering sales in north India and buyers are reluctant to contract good volumes, he added.

Rains were lower in the cardamom-producing regions in India leading to widespread damage to the plantations, he added. Cardamom plants have 9-10 pickings per season starting from July and extending up to April.

Lower summer rains and delayed monsoon leads to delayed flower setting and lower yield. The last production (2011-12) could be as high as 15,000-16,000, trade sources said.

Spices Board estimates Indias production in 2010-11 to be 10,350 tonne.

Arrivals at the auction centers are down by 50% when compared to the arrivals during the same time last year. Farmers are also holding back supply in hope of a gain and arrivals at the auction centers are in the range of 40-45 tonne when compared with 75-80 tonne during last season, Punnoose said.

Exports are on the lower side with prices moving up and may end up lesser when compared to last fiscal when 4,650 tonne of small cardamom was exported from India. In the past, higher domestic prices in India always led to higher imports from Guatemala, as the global prices constantly stayed at a discount when compared to the Indian prices.

Production in Guatemala has certainly improved from the 16,000 tonne reported last year and may touch 25,000 tonne during current production season. But it is still lower than the normal production of 35,000,trade sources told FE.