Guatemala keen to sell off lower grades of cardamom
GUATEMALA has seen strong demand from India for its cardamom in recent weeks as the Asian country looks to make up for a shortfall in its own output.
Sales have also been encouraged by the fact that Guatemala has maintained low price offers on its mixed yellow quality (MYQ) and pale green cardamoms as it looks to sell off remaining 2011/12 crop material ahead of the full flow of new crop arrivals.
Sameer Chaturvedi of Dubai-based Robust Trade Links, which also has an Indian-based operation called KM Ganatra & Co, “India, which was an attractive seller, has turned a buyer, trying to mop up lower grades in Guatemala.”
Mr Chaturvedi explained that India was buying up MYQ and pale green cardamoms. “Interest is rising each day from India to cover economically priced parcels, particularly as Multi Commodity Exchange (MCX) contracts show a marked premium on future deliveries,” he said. Speculative activity on the MCX was described as being “quite aggressive”.
The Guatemalan MYQ material was being offered at five-year lows of around $3.75 a kg.
Andrew Barker, managing director of PBA Brokerage, said MYQs of 360 gpl were in the range of $3.50 to $3.75 per kg.
Mr Chaturvedi noted that South Asia as a whole had remained an active buyer of lower grades and he was convinced buyers in these destinations would hoard material.
In view of hefty import duties in place in India it is felt that it makes more economical sense for India to purchase the lower grades of Guatemalan cardamom. The price of the Guatemalan whole greens is such that the addition of an import duty would make this material prohibitively expensive for India as it would probably exceed the cost of India’s own whole green cardamom.
Mr Barker added that Guatemala was said to have benefited from its highest ever output this October compared with the same month in previous years and he was expecting hefty volumes in November also. “So it looks like Guatemala has a huge crop and they will obviously be looking to get rid of any old crop material before they start selling the new crop,” he said.
Prices remained weaker than those of a few months ago. Mr Barker said seeds were between $6.50 and $7.00 a kg while medium whole green cardamoms were from $11.50 to $12 a kg.
Mr Barker observed that there was “quite strong” demand from the Middle East for Guatemala’s whole green cardamoms. “They have got a big crop and the price is not crashing and the reason is because there is good, strong demand from the Middle East,” he remarked. “When and if demand slackens off in February, March or April, I think the price will ease.”
However, one Rotterdam trader cautioned that he still had the impression there was a reduced availability of green cardamoms from this crop compared with an improved supply of lower grades – MYQs and mixed greens. He added that he was expecting a firming price trend ahead as shortages of the green cardamoms took effect and as Guatemala reacted to high prices from India.
In addition, he was still inclined to believe the final crop size would end up down from the estimated 28,000 tonnes in 2011/12 due to damage from the thrips insect in key growing areas of Guatemala. These insect attacks were another reason for the reduced supply of whole greens, the trader observed.
