Traders shifting from clove to other spices

Losses rise as prices slump from Rs 450-500 to Rs 225-230 a kg.

Asevere drop in the prices of clove has forced small traders to shift business from clove to spices such as pepper and chilly.

"We have incurred a huge loss because the price declined by half at Rs 225-230 per kg today from Rs 450-500 per kg around same time last year. Anticipating a spurt in prices, we had built huge inventory. But, the dramatic price decline frustrated us, resulting in shifting our attention from clove to pepper and chilly," said Yogesh Mehta, a noted trader at APMC, Vashi.

Mehta halted dealings in clove five months back in anticipation that the prices would remain bearish and the losses would not be recovered.

"Not only I, but a number of other Vashi-based traders have stopped local trade and imports of clove. Pepper and chilly have become hot commodities today and everybody wants to trade in them," Mehta added.

Meanwhile, the rise in the price of clove by 8 per cent in the last two days has brought some respite to the big fishes. But, such a small percentage change is unlikely to have an impact on the sentiment per se.

Only a steady trend could lure the traders back. A price rise of Rs 15-20 a kg in two days indicates speculative buying in this commodity and this is not a healthy sign for small and medium traders, Mehta maintained.

The clove prices today range between Rs 225-260 a kg depending upon quality and availability of material. The Colombo variety is quoted between Rs 225-235 a kg, while the Madagascar variety is sold in the range of Rs 235-245 a kg.

India produces hardly 50,000 bags (1 bag = 50 kgs) of clove, which is of No 1 variety and is primarily meant for exports to the Gulf countries and Canada.

The country's consumption is about 2.5-3 lakh bags and is met through imports from Indonesia, Madagascar and Colombo among others.

Traders are divided on the prospects of clove. Arun Ramjibhai Bhide, president, Navi Mumbai Commodity Brokers Welfare Association opines that the price would remain volatile in the months ahead as there is no sensitive report of crop damage in Indonesia and Sri Lanka.

In contrast, Mehta feels that the bearish sentiment towards clove would prevail throughout the year as the traders lose interest in the commodity. Big traders would keep importing at lower prices, while the small and medium traders would continue abstaining from the market, Mehta concludes.