Vanilla call options gets poor response globally

Vanilla call options, introduced for the first time by Vanilla India Producers Company Ltd (Vanilco) two weeks ago, have received poor response in the global market owing to higher prices. Paul Jose, managing director, Vanilco said that enquiries were on but no contract had been materialised so far.

"The global price tag is at lower level," he added. Global vanilla price for cured beans is hovering around $40 a kg. Vanilco had put forward two options at $60 and $80.

While introducing the new concept in the global vanilla market, the top management of Vanilco had anticipated an increase in the international prices. The company expected a price range of $75 -80 a kg. The $60 and $80 call options could not attract the consumers.

He said that the global markets have steady price movement due to expectations of increased production next season. In Madagascar, the world's largest producer of vanilla, total production would be around 1,500 -1,800 tonne which is almost the same as last season.

The domestic production is expected to double this time owing to favourable climatic conditions in Kerala, Tamilnadu and Karnatka. In next season from October, the total production of green beans is estimated at 1,200 tonne, up 100 per cent. The latest production estimates globally have made the market bearish.The total global requirement is around 3,000- 3,500 tonne.At present, the lower price tag of synthetic vanilla is a major hurdle for a spurt in the price of vanilla.

Vanilco has an unsold stock of 30 tonne cured beans in order to hedge the risk. He added that if the market did not pick up on the lower price tag it would be difficult to sell off the product. Vanilco had procured 132 tonne vanilla at the Rs 250 a kg last season, when the price had dropped beyond Rs 100.Hence slashing price would suicidal for the company.