Short supply to fuel nutmeg price rally

The nutmeg and mace market has seen a big rally in recent weeks amid speculation over the size of crop next season. The steep rally has taken the price of unshelled nutmeg to Rs 270 a kg but later stabilised around Rs 250.

According to leading stockists at Kalady, a major market in south India, prices have risen by Rs 30-40 a kg during the last couple of weeks. Likewise, the price of top-quality yellow mace has jumped to Rs 450-470 a kg from Rs 420-430.

Best quality red mace, which is rarely available in the market, is fetching more than Rs 500 a kg. Shelled nutmeg yesterday was quoted Rs 130 a kg, up Rs 20 from the last fortnight.

The appreciation is mainly due to severe shortage as supply from growing centers is nearly nil. Hence, according to local traders, growers with stock are reluctant to release it. Market sources expect a good rally during January-February since the next production season is a long while away.

The price of unshelled nutmeg may cross Rs 300 and that of best quality mace might touch Rs 600, according to a section of traders. But it also depends in part on the size of demand from north India. The sharp fall in supplies does, however, ensure further rise in prices.

According to a trader, the initial crop, which is popularly known as Makarakkaya, is not available in the market. "This is the time for the arrival of early nuts, but we are lacking Makarakkaya heavily this season. This indicates an overall shortage in production in 2008 season," he added.

Unexpected rain and the weak winter during December affected the flowering of trees, according to growers.

The only factor that may affect the current fundamentals is a sharp increase in imports, which dampen demand for domestic produce.