Market Intelligence Centre - Kerala Agricultural University

 

Cardamom Price Forecast - December 2009

 

CARDAMOM MARKET TO REMAIN BULLISH ON PRODUCTION SHORTFALLS

 

Small Cardamom (Elettaria cardamomum), described as the “Green Gold” is undoubtedly the “Queen of Spices”. It is the world’s third-most-expensive spice after saffron and vanilla. Cardamom is used as flavorings in both food and drink, as cooking spices and as  confectioneries. It is also used as a masticatory, and finds quite a number of uses in medicinal formulations. The oil contained in the seeds and pods are used in perfumes and as a stimulant. It enjoys an enviable position in the international trade of spices.

 

Guatemala, India, Sri Lanka, Tanzania, El Salvador, Vietnam, Laos, Cambodia and Papua New Guinea are the major cardamom growing countries in the world. The world production of cardamom is around 36,000 tonnes per annum. Guatemala leads the global production, with an annual production of around 23,000 tonnes (approximately 64 per cent of the world production), followed by India and Tanzania. The West Asian countries like UAE and Saudi Arabia, Denmark, Finland, Norway, Japan and USA are the major consuming countries.

 

Kerala is the major cardamom producing state in the country, having a share of around 56 per cent area, 76 per cent of the total production, and a productivity level of 207 Kg/ha. Idukki district accounts for the lion’s share of cardamom produced in Kerala.  This is followed by Karnataka accounting for 36 per cent, with Tamil Nadu accounting for 7 per cent for the total cultivated area, and 15, 9 percentages respectively of the total production. Cardamom is extremely rain and temperature sensitive. It needs low temperature, high humidity and incessant drizzles.        

•         The Cardamom harvest season in India spreads from August to March, and the peak harvest season synchronizing with the bulk market arrivals are expected from October to December.

•         Traders’ survey at Vandanmedu and discussion with knowledgeable sources in the Spices Board indicated that there is a reduction in crop output amounting to 15-20 per cent as compared to the last year owing to the pre-dominant dry spell in the summer months of 2009.

•         Trade reports also indicate a substantial reduction in cardamom production in Guatemala due to adverse weather conditions and subsequent poor crop stand. Thus, the competition from Guatemala appears very weak during this year.

•         The heat is turned on the global market due to the deficit production in two major producing and exporting countries, resulting in a bullish phase for the Cardamom prices. The average price which was hovering around Rs.500 per Kg during October, November, December last year has crossed Rs.800 per Kg during December 2009. The auction average price on 16/12/2009 at Vandanmedu was Rs.957/Kg. There is every possibility that the export grade viz., AGEB may cross Rs. 1000/Kg during this harvest season itself.

•         This is reflected in the futures market also where the price is floating around Rs. 1050 per kg for the months of January, February and March.

 

It is against this background that the NAIP- Agricultural Market Intelligence Centre (AMIC) functioning in the Department of Agricultural Economics, College of Horticulture, Kerala Agricultural University analyzed the past 13 years’ average weighted price that prevailed in Vandanmedu market and also conducted a traders survey in this market in order to assist the farmers in better decision making. The average weighted price forecasted for the months of January, February and March 2009 based on Vandamedu prices will be as follows:

 

 

Trade sources informed that arrivals may pick up if good monsoon showers are received during January or else the production deficit that may go up to 30 per cent than the previous year. However, sources in the Spices Board admitted that they anticipate a production fall within 20 per cent than the previous year. Viewing all these estimates and speculative activities indicated by the futures price coupled with our own price analysis, farmers are advised to store and sell by end of February, 2010 for higher prices.