Higher arrivals have been putting pressure on cardamom prices. Prices are expected to remain range-bound and any drastic correction is not expected in the near to medium term.
Over the past few days, arrivals have been higher than normal. Against the usual arrival of 15 to 20 tonnes, 20 to 27 tonnes have been coming to the market. But the offtake has been lower and this has been keeping prices under pressure.
“Export demand has been lower and some of the Indian traders have even been procuring cardamom from Guatemala. This lesser offtake ahead of the harvest season has been leading to increased supply in the market,” said Hareesh V, senior analyst with Geojit Comtrade.
Either demand-supply equations or the weather have been impacting prices for some time now. Cardamom prices hit a high of Rs 1,500 a kg in August. Since then, they have been trading lower. In September, the prices were around Rs 1,200 level. By October, they fell to a low of Rs 708 a kg after the monsoon made up for the shortfall in rains during July-August. Sufficient rains lifted hope of a good crop in October.
The festive season saw both domestic and export demand moving up in the fag end of 2012. Prices moved past Rs 1,000 to Rs 1,082 a kg in the last week of January. Earlier, there were speculations about a lower crop in Guatemala. However, Guatemala came out with a bumper crop and this lowered the international prices further.
Indian cardamom, which usually quotes a higher price, had become even more costly and subsequently export demand diminished. Prices once again started their downward slide and by February 23, they moved to Rs 970 level.
“Prices will continue to move within the Rs 950-Rs 1,000 range in the near term. If they consistently trade at the Rs 1,050 level for some time, we could see some upside. On the downside, Rs 950 is a strong support while next support exists at Rs 880. However, a drastic fall in prices is not anticipated, given that the difference between Indian and international prices have narrowed down,” said Hareesh.
If there is any unexpected development on the weather front, prices can move up steadily. Prices can also move down if there are developments impacting consumption, like the gutka ban in several states last year, he added. zz