October 2016
MARKET TREND
PEPPER
The market showed a mixed response during the week. In Vietnam and Lampung, local prices of black pepper decreased marginally, while in Sri Lanka increased. In India and Sarawak the prices were reported stable.
In the case of white pepper, the price has decreased in Bangka and China. Stable price of white pepper was recorded in Sarawak.
Currently, activity in the market was limited. Less demand seems to be the main reason for the situation. Although pepper harvest in Lampung has over and clearly resulted lower output, buyers are still reluctant to extend coverage, expecting to get more competitive price from Brazil which is now in the peak of harvesting season.
Minor Black Pepper crop season in Sri Lanka is generally from November – January. This year we are expecting the crop to start a little earlier. The minor season crop is so small to make a substantial impact in the pricing for oleoresin industry. The season is generally used by oleoresin industry for stocking up till next major crop season (May 2017).
In Strong festival demand from Tamil Nadu (India) for High Range pepper is keeping the prices steady at a time when there is no upcountry demand forthcoming due to availability of imported pepper.
CHILLI
Crop transplantation activity is currently underway at crop growing areas:
The month of September saw very heavy rainfall in key growing areas of Chilli. In a time period of 5 – 7 days, major crop growing areas received very heavy rainfalls. It has to be noted that majority of areas got flooded due to the rains.
The major areas which faced floods were Guntur and Hyderabad. The key inputs from the excessive rains and floods are as such:
Crop was in nursery stage and 25% of transplantation was complete. Transplanted crops got damaged. 25 – 30% Crop damage is expected from Guntur.
Dams and reservoirs providing water for Chilli crop are full. There would no water scarcity as experienced last season o General Chilli crop harvest is in the month of February. This year, due to the excessive rains & floods, Chilli crop is expected to be delayed by 15 – 20 days.
Government has announced crop holiday to Cotton because of unsustainable prices of the commodity. As a result, large tracts of Cotton cultivation land is expected to be shifted to other alternate crops. Chilli faces competition from pulses, Turmeric.
CHILLI
Tobacco crops. We believe that 2016 season prices for Chilli crop has attracted large number of farmers towards Chilli cultivation. We have noticed 25 – 30% increase in primary sowing areas for Chilli.
Seed companies of Chilli have increased prices for seed due to increased demand. Currently price of seeds stands at INR 450 / 10 gm in comparison with INR 220 / 10 gm last year
Land lease rates have increased by 25 – 30% over last year due to increased demand from farmers for Chilli cultivation The new crop season is expected to start by middle of February 2017. With four months to go, prices are expected to remain firm in short term. We forecast a Chilli RM price reduction for 2017 crop season.
PAPRIKA
Paprika crop harvest has started in China. The Paprika crop is larger than last year. Still, it has to be noted that Paprika Raw Material prices are 15 – 20% higher than last year. This is mainly because of the fact that there is larger competition among Paprika
Oleoresin makers in China for the Raw Material. New crop offers are expected to come from next month onwards. Indian Paprika crop is expected to start from month of January 2016. Indian crop expectation is 10% higher than last season. We would get to see a lot of speculation in the Paprika market in the coming months.
CARDAMOM
Cardamom prices remained firm today after remaining steady for a fortnight at the auctions held in Kerala and Tamil Nadu. Cardamom arrivals reported at 84.5 tonnes per day and almost the entire quantity was sold out. Growing belt in Kerala continued to experience the dry spell in the Idukki district, where 75% of the Cardamom is grown in the country. Failure of the north-east monsoon which is expected in the coming days would result in severe water shortage in the growing areas which have also prompted the stockists. Cardamom futures at MCX traded positive since opening. Prices have given positive breakout which could lead prices to trade higher . Prices likely to get support from festival season.
Participants are holding their long position and traders are making new long position as prices are trading higher. Traders are waiting higher levels to book profits. Indian Cardamom export is highly depended on Guatemala crop pricing. This year, Guatemala crop is delayed and is expected only by October – November. This will keep Indian prices higher in short term.
Festival season in India & Middle East will be on till end of October. The demand for Cardamom is expected to be high till end of October. We expect prices for Cardamom to reduce starting from month of November. Cardamom is expected to trade at a premium of 30 – 40 % higher than last season level. Better forecast can be given after festival season in India.
TURMERIC ďƒ’
Turmeric prices gained due to expectation of good demand from domestic as well as upcountry buyers ahead of festival season. Though, higher arrivals from major producing belts capped some gains in turmeric prices. In Telangana State, Turmeric sowing reported week ending 28-09-2016, around 45633 hectares as compared to last year same period 40830 hectares, normal in season 48083 hectares. Turmeric crop is in vegetative stage to flowering stage.
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Warangal districts reported highest 12030 hectares compared to last year 7558 hectares, Nizamabad 11754 hectares, Adilabad 7135 hectares compared to last year 7253 hectares till date. Besides, the rally was triggered by reports of crop damage across Telangana and Andhra Pradesh, which received incessant rains during the second fortnight of September. According to news sources, over 2.5 lakh hectares of crops such as turmeric, chilli, soyabean, paddy, cotton, have been damaged. The extent of damage to turmeric is yet to be assessed. Though overall acreage under turmeric is marginally higher than last year, production is expected to fall because of lower yield. Indonesia Turmeric season is almost over and is expected to end by month of November.
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During last season, Indonesian farmers have seen prices increasing by 20 -25% towards end of season. Major farmers are holding back stock thinking the same will happen this season as well.
CORIANDER
India has been outpaced by Russia as the largest exporter of Coriander in the international market. Nearly 45,000 tons of Coriander has been shipped by Russia during Jan-Aug 2016, and is well set to capture a third of the global market, as per Russian Export Centre (REC). In the first eight months of 2016, Russia exported more Coriander than it did in all of 2015. During January to August 43,500 tonnes of Coriander was shipped against 31,500 tonnes in 2015. The figure was only 9,000 tonnes in 2014.
India was the major market for Russia with 58% of it’s Coriander exports. Other major purchases were done by countries in South Asia – Sri Lanka, Pakistan, Nepal, and Indonesia, Europe, and the Middle East, as per REC statement.
During April to July 2016, India imported around 16,380 tonnes of Coriander compared with 899 tonnes during the same period last year, which has pressured domestic prices.
CUMIN
Indian Cumin Seed is currently going a volatile phase. Indian Cumin Seed season is from April – June. Currently there is very minimum market arrivals.
Global demand for Cumin seed is met by India, Syria and Turkey. With recent political unrest in Turkey and growing instability in Syria has dramatically reduced Cumin seed export supply from these markets. It has to be noted that the year 2016 saw record Exports of Indian Cumin. This has adversely affected Indian Cumin prices and we have experienced price rise of 30-40% in a period of 2-3 months.
NUTMEG
Indonesia is the largest producer and exporter of Nutmeg contributing to 80% of global demand. Currently Nutmeg is traded at 25% premium to last season. This is mainly because of the diminishing stocks with major farmers and farmers holding surplus stocks waiting for better prices. Above all major companies are aggressive to secure their position for meeting their oil and oleoresin needs.
We believe Nutmeg prices are expected to remain firm in short term. Indian Nutmeg season is over. There is large carry forward stock availability. It has to be noted that carry forward stock’s quality is not up to mark. Crop prices are expected to remain stable till next crop season.
SOY PROTEIN
The farmers have finished harvesting the new soybean. Presenly, the quality of soybean is not good, the protein content is 35%-36%, under the 38%. We ask the protein content of soybean above 38%, the 40% is good.
The protein content of soybean is lower. We forecast the defatted soy flake price will be up or in high level. It will cuase the rise in the cost of ISP. Besides, the yuan has fallen against the dollar.
In the meantime because of the bad environment in Beijing area, the central government paid more attention of the Shandong plants' working here and in this way, many plants are not have full production capacity here and I heared some plants have been closed for two weeks.In November, the price would inrease a bit and for December and Jan price, we have to see how is the total market at that time.
CLOVES
In the case of Comoros one of the main problems appears to be the approach being taken by cloves trading while in Madagascar there are quality issues with the crop and a series of logistical difficulties.
Comoros
The government in Anjouan decided to settle a minimum price to be paid to farmers/ collectors, making the trade more difficult and tens, and could generate the destroying of clove supply chain in Anjouan and Moheli, while the potential 1,000 tons carry-over are being traded over the last quarter of 2016.
Madagascar
Ahead of the October 7 official opening of the southeast cloves campaign in Madagascar there had already been some purchasing.This had been of “baby” cloves with 30% moisture. This year’s Madagascar crop is expected to provide good options to buy from the south. Is estimated that the crop should give a total of 9,000 tonnes (compared to most probably some 13,000-15,000 tonnes last season) with 40% of southern cloves and 60% of northern cloves, plus 1,500-2,000 tonnes carry-over.All information so far shows that still the quality of cloves in the south is poor, with almost 20% of “baby” cloves and most likely 22-25% moisture.These cloves apparently look like a good raw material for people buying cloves for distillation purposes.
CLOVES
The communications means are terrible in the south, and the bridge going from Faranagana to N12 (to Tana an Tamatave) is broken.There is no chance to see it being rebuilt before the end of the year and we can only ‘tranship’ cloves from one side of the river to the other by five tonne lots, on barges, to reload the trucks.This obviously does not help logistical operations and is quite expensive and could even prove to be risky.
For these reasons, and the fact that weather conditions are not yet good enough in Tamatave to ensure a good and quick drying of the cloves, most of the “serious exporters” there have not been entering the season yet. They will obviously do so as soon as all parameters are there for them to offer and ship what international buyers are expecting to receive when they do buy Madagascar quality, still under supervision of the GEGM.
MILK
The €150m EU milk reduction scheme is fully subscribed, bringing the European Commission’s emergency supply management programme to an abrupt and rapid conclusion. Just over 6,000 farmers from 25 member states (all except Greece, Cyprus and Malta) submitted applications for the second period (Nov 2016-Jan 2017), offering to reduce milk production by 97,880t (95,000 litres) — massively in excess of the 12,198t (11,844 litres) still available.
Applications for the payment of 14c/kg for milk not produced (compared with a year earlier) were mostly from the major producing countries. The Commission will apply an allocation coeffi cient of 0.1246 to the volumes covered. Dutch dairy farmers will have to reduce the size of their herds by up to 8% in order to meet EU phosphate limits, reducing their cow numbers by around 100,000 to meet EU targets on phosphate production. The exact number will be agreed next year.
According to the Germanbased International Farm Comparison Network, world farmgate milk prices should have increased by more than 50% since May based on world prices for a basket of dairy commodities.