Cardamom futures face delivery problems

Commodities are turning spicier with cardamom facing delivery problems.

Futures trading in the commodity was facing problems as the Spice Board has not been issuing certificates on the fresh arrival of produce.

As a result, traders said trading in the commodity has not seen deliveries being deposited in the warehouses as necessary certificates guaranteeing quality were missing.

Hardest hit was the Ahmedabad-based National Multi Commodity Exchange (NMCE), which handles largest volumes in the commodity.

Godown receipts (GRs) are issued on the basis of the quality certificate and trading is down on the GRs. The exchange had appointed the Spice Board to provide the certification service.

According to a prominent Mumbai-based trader of spices, most of the fresh arrivals were reportedly rejected on grounds that they were old stocks being passed off as new.

This was causing problems with the Spice Board on the issue of certification. This in turn, has led to most of the futures positions being squared off, leading to artificially propped-up prices.

Depending on the quality, cardamom was currently trading at between Rs 101 per kg for the lowest grades, to Rs 270-310 for the middle grades to Rs 390 to Rs 525 per kg for the top grades.

According to the managing director of NMCE, Kailash Gupta, the exchange has made provisions for additional facilities, with the assurance that the Central Warehousing Corporation (CWC), a promoter of the exchange, would certify the quality of the produce directly if it was from the new crop.

GRs would then be issued without problems. The traders would not have to the Spice Board on all occasions, he clarified.

"The traders however, are not coming forward, and this is creating roadblocks in the operations," he said.

Indian cardamom currently faces stiff competition from supplies from Guatemala in the global market. Major buyers include west Asian countries.

While Indian cardamom is sold at roughly $3-$4 per kilogram in the international market, the Guatemalan product is much cheaper at $1.9 to $3.9 per kilogram.

Indian farmers have been enjoying heavy subsidy support starting from Rs 45 per kg as freight subsidy.

This year, the cardamom crop has been higher at roughly 28,000 tonne, compared to the usual average of 25,000 tonne, along with an additional carry over stock of approximately 4,000 tonne.