Cardamom market facing upward potential

International cardamom prices could show rises over the coming weeks due to a smaller crop in Guatemala and reports of strong demand for cardamom in India.

However, any gains ahead in Guatemalan cardamom prices are not expected to be dramatic as a lot of coverage was undertaken earlier in the season when prices were lower. Current demand was said to be weak as buyers saw prices increasing.

Andrew Barker, managing director of PBA Brokerage, told that his contacts in Guatemala were estimating that the 2013/14 crop would end up at some 5,000-8,000 tonnes less than that of 2012/13.

One Rotterdam trader said his data suggested that the 2012/13 crop reached around 30,000 tonnes, added to which there had been some 3,000-4,000 tonnes of carryover.

This 2012/13 crop estimate contrasted slightly with a view this January that last season’s crop reached 35,000 tonnes

The Rotterdam trader pointed out that carryover for 2013/14 probably amounted to no more than 2,000 tonnes. He added that it looked as though Guatemala was now in a phase of a few years of lower output, meaning that the next crop (2014/15) might show a further decline from that of 2013/14. “That also has to do with prices of course, because prices have come down heavily since the last three years so there is less interest from the farmers to grow cardamoms so they concentrate on other crops,” he said.

Latest reports have confirmed the earlier view that this season’s crop suffered a higher incidence of damage by the thrips insect. This has reduced the availability of good quality, whole green cardamoms.  “This seems to be an ongoing problem, but it’s getting slightly worse each year,” Barker observed. “It’s difficult to get large, whole green cardamoms in Guatemala at the moment.”

The Rotterdam trader pointed out that this was evident in the large price differential between whole green cardamoms and grinding qualities – such as mixed, yellow qualities (MYQs) and mixed greens. In addition, he noted that material damaged by thrips could still be used for grinding purposes.

Bold greens drastically short

Hemen Ruparel of Mumbai-based Emperor Akbar Green Cardamoms said: “My sources (in Guatemala) say they are not offering the green grades. Particularly in the bold green grades there is no stock. However, the consumer markets are already full with stocks.”

Harvesting finished in April so further assessments of the 2013/14 crop size could emerge over the coming weeks.

Barker said that the material remaining in Guatemala now was available for export.

Price quotes varied between shippers, he noted. Barker indicated Guatemalan medium whole green cardamom of full green colour at USD10.50-13.00 per kilo. A small, whole, full green colour cardamom was ranging from USD9.50-12/kg. “There is a big price range,” Barker remarked.

MYQ of a minimum 560 g/l was around USD5.25/kg and seeds were trading around USD6.00-6.50/kg.

Lack of activity

“The market at the moment is not very active because prices are rising and people bought a lot when the prices were lower four to six months ago,” Barker explained. “But there is trade going on at these prices,” he added. “Most expect the prices to continue to rise a little bit up until the new crop in September.”

Ruparel noted that Guatemala tended to be approaching the end of its season now, meaning that it shipped less cardamom between June and August. “So the action is only within the available stocks with the major players. Hence, we do not see any activity in their side until September,” he said.

The Rotterdam trader agreed that the market was in its slack period of demand after the bulk of coverage had been completed in February and March. “We are now in a stable scenario where prices are not fluctuating too much either upwards or down. So for the time being we do not expect any major movements – only towards the new crop and after the new crop,” he said.

Ruparel explained that Indian cardamom prices showed sharp gains in the last month on the back of poor quality arrivals, speculative interest and strong domestic buying from the northern parts of the country.

Export demand which was strong until April dried up as the price differentials between Guatemalan and Indian cardamom widened.

The crop quantity closed at about 20,000 tonnes, Ruparel said. Exports for the period April- December 2013 were 2,080 tonnes and could have increased to around 4,000 tonnes up to March 2014.

“Hence, we believe that there is a carry forward stock from the last year of about 2,000-3,000 tonnes. However, we believe that this should be mainly the smaller grades since the price range between the smallest and largest grades is wide,” Ruparel added.

The Spices Board of India gave a slightly different figure for Indian cardamom exports during April-December 2013 of 2,490 tonnes, which was 13% up from the same period a year ago.

A report in the Hindu Business Line suggested that Indian cardamom prices could remain high for the next few months at least due to a forecast lower monsoon this year, which would pose a threat for output.