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Clove prices may rise on short supply To facilitate more imports and to arrest under-invoicing and other malpractices, the Centre has reduced duty for shipments from Madagascar and Zanzibar to in effect around 25 per cent from the existing 36 per cent through a notification (No. 67/2010-Customs New Delhi) dated June 8. On the reduction, the Public Ledger said: reduction of import duties on Madagascan and Zanzibar cloves will have little immediate effect as those origins have little left to sell this campaign, adding fuel to Comoros prices that have surged by up to 40 per cent in a week. This phenomenon on the one hand and favourable weather conditions coupled with lack of buffer stocks on the other had pushed up clove prices, market sources in Bangalore and Mumbai told Business Line. are no buffer stocks available while the requirement has picked up strongly with the demand outweighing the supply. So markets are moving up a major dealer said. Good demand According to importers good demand was there for Madagascar and Zanzibar cloves as this year new crop is projected to be small in all major growing countries including Indonesia, Comoros and Brazil. Madagascar new crop will arrive only by January 2011, a long way to go for its arrival, while Zanzibar crop will arrive in November. But, as the demand is very strong here the prices will cross Rs 350 a kg for Colombo cloves and Rs 400 for that from Zanzibar, they claimed. The markets have suddenly moved up by Rs 2550 a kg on good buying support, they said. current trends show huge price advantages, very shortly prices of Colombo cloves will reach Rs 350 plus, as the price difference is too high, so low-price cloves will increase more, another dealer claimed. prices are bound to increase in the coming days, as next six months are festive months. Sri Lankan crop is over, the prices quoted at present are at $6,300-6,500 a tonne and in the next few days it is likely to cross $7,000 a tonne, which in turn is likely to push up its prices here to cross Rs 400 a kg, they said. Indonesian crop this year is only 60 per cent. The Cigar companies are buying locally there at $6,200 a tonne. Also, these companies said to have already bought the entire Comoros crop at $4,800-5,200 a tonne. As a result the world markets are facing a shortage at present in supply, they said. The average prices in the growing countries are in the range of $5,500-6,000 a tonne. At this rate the import costs work out to Rs 400 a kg and as such the prices in the domestic market here are to be in the range of Rs 400 and Rs 500 a kg in the coming days, they claimed. An Indian importer was quoted by the PL as saying that was a highly expensive option. Similarly, India import from Indonesia as local prices were a lofty $6,200 a tonne, meaning Indonesian players were actually looking to import at $4,500 to $5,000 a tonne to supply and create buffer stocks for the country's kretek cigarette producers. The current crop has been comparatively good at above 2,000 tonnes, growers in Kerala and Tamil Nadu said. The total demand is estimated at over 15,000 tonnes a year and much of it is met by imports, official sources said.

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