Cardamom rises 50% on festive demand, low output

The surge in prices of cardamom in the domestic market is continuing unabated and the demand from the north Indian markets for the festival season is likely to push prices further up.

The shortfall in rains during June has affected the crop and the output may fall by 20 to 25 per cent.

The market would remain bullish till Deepavali, owing to a host of reasons. Lack of rains in the first three weeks of June has affected the crop badly and growers estimate a fall in production by 20 to 25 per cent in the ongoing season, said K K Devasya, executive secretary, Cardamom Growers Association.

George Valy, a leading planter of Kottayam, is of the opinion that cardamom production would drop by 40 per cent.

The best quality 8 mm bold grade now fetches a price tag between Rs 500 and Rs 550 a kg and the prices of the lower grade is ranging between Rs 250 and Rs 300. The average price of cardamom has increased by 50 per cent to Rs 450, which is higher by around Rs 150 in the last season.

The rise in spot prices and the likely drop in production have enthused futures trading and MCX has registered a high turnover in cardamom during the last three days.

MCX recorded a business of Rs 55.40 crore on Tuesday in 8,127 deals at 1,206 tonne. Wednesday saw the trade soar further with 7,615 deals touching a volume of 1,244 tonne at Rs 57.7 crore.

By Thursday noon, the total volume had reached 657.4 tonne at Rs 32 crore. Market sources forecast the current bull phase to continue till October and November. Some optimists even feel the prices may touch the highest tag of Rs 800 to Rs 900 a kg that had been registered a couple of years ago.

Sources at MCX revealed they had expected a daily average turnover of Rs 50 lakh to Rs 1 crore when they had commenced futures in cardamom around six months ago.

"The current response from the market is overwhelming, which we had never expected. Now, cardamom has become one of the largest traded agri-commodities on MCX in terms of number of trades and volume," a top official said.

During the last season (June to November 2005), the total production was between 15,000 and 18,000 tonne, while the official estimate of Spices Board is 13,000 tonne.

During the same period, the domestic consumption was around 14,000 tonne. The prices had even dropped to Rs 150-180 a kg during the last season and, owing to this, farmers had almost neglected the crop.

As a result, the carry-over stock in the market at the beginning of this season is almost nil and whatever stock coming to auction centres is being lapped up on the back of very good demand.

The global supply is short at present, as Guatemala, the largest producer of cardamom, will be active only by the end of this year.