Page 1

16.02.2017 UPDATE

MARKET TREND


CASSIA 

Indonesian Cinnamon (Cinnamomum Burmanii Blume) is mainly found in Central Sumatra and shared between two provinces (West Sumatra and Jambi). At the center of these forests is the Kerinci volcano (that the Dutch called “Korintji” during their long colonization of Indonesia). The entire Kerinci farming area is around 150,000 Ha according to Government numbers and Cinnamon can be found in 3 main locations: Padangaro, Kayu Aro (Siulak) and Gunung Raya (the largest source of cinnamon in Kerinci). Cinnamon plantations can also be found in other areas of Sumatra (Bukit Tinggih, Bengkulu, Palembang, …) and even in Java and Sulawesi islands, but the quality and volume of raw material harvested cannot match that of Kerinci.

Traditionally Kerinci cinnamon is in peak demand at the start of the rainy season (November to April); from May to July we experince a slowdown and then activity picks up again in August to anticipate The Winter Holiday season in Western countries.

For the last 10 years or so, pulling hundreds of tons of cinnamon out of Kerinci during any season was never an issue. Things have changed !


CASSIA 

In the past trees chopped were mostly near the roads, making harvested barks fairly easy to drag to road for transport. Today with disappearing forests, farmers need to go deeper and deeper inland to chop the trees, carrying the barks on their shoulders for many kilometers in order to transport their harvest.

Prices have already begun to rise steadily (reflecting the diminishing availability of barks being offered) – HIGH QUALITY Cinnamon will become scarce faster than the low quality bark from younger trees

To make matters worse, you must consider that even when prices finally reach a level that is profitable enough to entice farmers back to planting and harvesting Cinnamon again, it will take many years to get back up to the point where the trees are at a suitable age for harvesting high quality Cinnamon (maybe as long as 1015 years!)


PEPPER 

Pepper market in Vietnam restarted in week 6 after long holiday, pepper price was on the down trend during that week, pepper price reduced about 350 usd/mt within the week. Pepper price was very attractive in the middle of the week.

Taking advantage of the low level, exporters who are in short position bought good volume, some even bought for speculation, demand was created and made pepper price stable and firm at the close of the week.

According to Vietnam customs, Vietnam exported 8,315 tons of pepper in January 2017, the crop is coming gradually in February and demand is quite good. At the moment, offer for February shipment is limited due to full capacity, Mar shipment is available Vietnamese pepper will face stricter scrutiny this year on excessive use of agricultural pesticides, especially in the EU and US markets, experts say.

A report by the Viet Nam Pepper Association (VPA) says the crux of the problem has been excessive amounts of Metalaxyl found in pepper exported to the EU. In previous years, the maximum residue limits (MRL) for this chemical was 0.1 parts per million (ppm), but the European Council (EC) had been petitioning to impose an MRL of 0.05 ppm.

The European Spice Association (ESA) had informed the VPA and the Ministry of Agriculture and Rural Development (MARD) last month that it had analysed 799 samples of black pepper imported by the EU market from Viet Nam in 2016. Only 17 per cent had the permitted MRL of under 0.05 ppm.


PEPPER 

Should this situation continue in 2017, approximately 80 per cent of Viet Nam’s pepper exports are certain to face difficulties in entering the European market, the report says.

Given that the EU has been a major buyer of Vietnamese pepper at about 40,000 tonnes a year, or 23 per cent of total annual pepper exports, this is a serious problem.

Meanwhile, the US market, which has also been importing about 40,000 tonnes of pepper from Viet Nam a year for several years now, is also set to issue new rules on the quality of imported agricultural produce, including pepper from Viet Nam.

Old mindset the VPA report identifies quality control in pepper production and processing as a major problem, which becomes more difficult to solve when a mindset of favouring quantity over quality persists among farmers.

A majority of farmers use unnecessary amounts of fertilisers and pesticides, weakening natural resistance and requiring even higher doses of the chemicals for subsequent crops, resulting in diminishing returns.

The agriculture ministry has also asserted that clean produce must be a top priority for the sector, especially with 2017 seen as a “turning point for national socio economic development plan”.


PEPPER 

In December 12, 2016, the EC had proposed to the World Trade Organization (WTO) that a 2005 decision on the MRL for various agricultural products including peppers be changed, and stricter conditions imposed. Other WTO members have 60 days to protest the proposal before a decision is taken.

The VPA has been working with the agriculture ministry and concerned agencies to deal with this situation. The VPA report says that until farmers recognise the severity of the problem and change their cultivation methods, more hardship and loss lie ahead.

Without improving the quality of pepper produced for both domestic and international markets, the industry will face falling values and increasing instability. It says that while world demand for pepper is set to rise in 2017, larger markets will no longer accept low quality products.

In 2016, pepper prices had fluctuated significantly in the international market, but the quantity exported reached an all time high. Export turnover last year was 179,233 tonnes of assorted pepper with a value of US$1.44 billion, an increase of 34.3 per cent and 12.9 per cent in terms volume and value, respectively.

Markets with major year-on-year increases in imported value for 2016 were Pakistan (314 per cent), the Philippines (300 per cent), the US (31.3 per cent), Egypt (23.2 per cent), Spain (14 per cent) and India (12 per cent).


CLOVES 

Madagascar and Sri Lanka Cloves: Cloves price strongly increased in both origins, demand is good while physical material is limited. Information about bad cloves crop in Indonesia also affect market situation.

CARMINE 

Main harvest end of 2016 ended with expected output and is now on the hands of the farmers & traders. Speculation has once again pushed prices upwards. Until next harvest March April, speculation from farmers, traders & industry, will keep impacting prices.

At the same time, heavy rain all over Peru in January have affected the crops, through  washing away the newly infested cochineals  washing away the white wax protecting the cochineals from the sun


CARMINE ďƒ’

Market does not contain excessive amount of cochineal, since output from last harvest was matching demand from the industry and demand for cochineal for re-infestation.

ďƒ’

Output from next harvest expected to be lower than demand now, and combined with the speculation, prices are not to decrease short term. Attempts in the market, to push down price of cochineal no longer successful, and higher prices must be paid to ensure volume. Farmers and traders have become more organized, which have increased their power on price.

ďƒ’

Outlook for price: more stable than 2016 but still volatile. Availability of cochineal expected to be challenged short term. Chr. Hansen is in a unique supply position, due to continued long term partnership with key suppliers


CARMINE


CARMINE OUTLOOK 2017

Market Trend - update  

16.02.2017

Read more
Read more
Similar to
Popular now
Just for you