Prices of queen of all spices, cardamom, are expected to remain higher in the coming year on tight supply amid likely good demand. According to traders, the Guatemala crop has declined this year due to unfavourable weather conditions. Lower export quotes from there may put pressure on prices in the domestic front. Nonetheless, overall, a global tight supply situation may push prices and the spice may touch a new high on strong domestic and export demand due to lean season for arrivals.

Aurobinda Prasad, head of research at Karvy Comtrade, said, “The fundamental factors are very strong for cardamom, which may attract buyers’ interest. Tight supply and robust local and export demand will keep cardamom prices on a bull run in the near term. Hence, we recommend buying cardamom even at present levels. Present prices are much lower than their historic high of Rs 2,097.”

In the financial year 2010, India exported 1,975 tonnes of small cardamom amounting to Rs 16,570 lakh, against 750 tonnes worth of Rs 4,726 lakh in the year-ago period. During April to November 2010, small cardamom exports were 575 tonnes, against 875 tonnes in the same period a year ago. India’s cardamom imports are very negligible.

In the past three months, the price of cardamom futures has surged over 50 per cent. Ajitesh Mullick, research analyst at Religare Commodities, said, “Since October, prices have been headed north as arrivals in the markets have come down to less than 350 tonnes from more than 400 tonnes and this has been keeping the trend firm for the commodity. Heavy rains in November and December in the growing areas in Kerala have created apprehensions of crop damage. Demand from north India further boosted sentiments due to the wedding and the winter seasons.”

Production of cardamom in Guatemala in 2010-11 is around 24,000-25,000 tonnes, compared with 28,500 tonnes in the previous year. Plucking of cardamom in Guatemala begins in September and ends in April.

According to a report by Spices Board, exports of cardamom from Guatemala in 2009 stood at 23,693 tonnes. Exports during April to August 2010 were posted at 12,261 tonnes.

Nalini Rao, a research analyst at Angel Commodities, said, “On an average, the production of the spice in India is around 11,000-13,000 tonnes. In 2010-11, it is around 11,000 tonnes steady or slightly higher as compared with the year 2009-10. Its consumption in the country is around 8,000-9,000 tonnes.”

From an investment point of view, Basant Vaid, senior research analyst at Bonanza Commodity Brokers, said, “I would recommend waiting for any corrective dip towards the range of Rs 1,450-1,400 per kg for initiating a long position in cardamom for a target price of Rs 1,780- per-kg range for the medium term.”

Technically, “the spice could find strong support at Rs 1,550 per kg and thereafter, at Rs 1,500 per kg; immediate resistance could be remain at Rs 1,640 per kg and thereafter, at Rs 1,700 per kg,” said Anand James, chief analyst at Geojit Comtrade.

On Thursday, January futures contracts of the spice settled at Rs 1,578 per kg.