Cardamom is known as the
‘Queen of Spices’ because of its very pleasant aroma and
taste.
It is one of the oldest and
exotic spices in the world, being the third costliest as well.
Cardamom is a native plant of
India, Sri Lanka, and parts of South east Asia. Its cultivation is very
labour intensive,
and accounts for 60–70% of
the total production cost in India.
The essential oils of
cardamom are extracted for flavouring and perfumery.
Global scenario..!
Cardamom is generally
produced in the tropical regions of the world. Gautemala is the largest
producer, with an annual
production of 35,000 metric
tonnes (mt), followed by India, according to USDA.
Since 2003, Indonesia has
emerged as a key producer, taking the number three spot in 2006 and accounting
for 18% of the world production.
In Guatemala, Alta Verapaz
and Quiche regions account for
approximately 84% of the
production.
 |
| Cardamom production in India and Guatemala |
In the marketing year
Sept–Aug 2014–15 Guatemala harvested 28,000 mt to 32,000 mt
Guatemala exports the
majority of its production to the Middle East, with small amounts to the EU.
 |
| Cardamom exports from Guatemala, 2014. |
As the market leader,
Guatemalan cardamom production strongly affects global prices. Guatemala
surpassed
India as the largest producer
in 1979–80. Harvesting in Guatemala continues throughout the year; however, the
main crop is harvested between September–March.
The total world production is
about 50,000 mt to 60,000 mt per annum. Total world exports in cardamom stood
at
58,335 mt in 2014.
Indian cardamom commands a
premium in the global
market due to higher
essential oil content, higher weight density, and far superior post-harvest
techniques than
the Guatemalan ones.
In India the pods are dried
in mechanized dryers
compared with wood-fired
dryers in Guatemala, exposing the pods to smoke stench.
Indian scenario..!
In India, 2 types of
cardamoms are grown—small and large. India plays a vital role in international
trade because
of the aroma and flavour of
its cardamom.
Small cardamom cultivation is
concentrated in the Western Ghats, which are also known as the ‘cardamom hills.’ The fruits mature in
about 3 to 4 months after flowering. The ripe capsules are then plucked around
six times during the harvest
season from August to March, approximately at 45 days interval. Peak harvesting
takes
place in October–November.
In 2014–15, according to
Spices Board estimates, India's production stood at nearly 18,000 mt. Idukki
district in
Kerala is the major
cardamomproducing area, contributing around70% of the total domestic
production.
MCX Cardamom..!
 |
| MCX Cardamom Futures Price (`/kg) |
MCX Cardamom November 2015
futures contract fell by 8.7% in October to close the month at Rs. 760.20 per
kg due to continuous arrival of fresh crops and lower-than-expected festive
demand.
Recent rainfall and conducive
weather in cardamom-producing areas also increased expectations of higher production. Between August 1
and October 24, 2015, arrivals touched 8,878 mt compared with 4,820 mt during
the same period last year.
Additionally, good
crop-output reports from Guatemala
also kept exporters at bay on
expectations of further weakening of prices.
Benefits of futures
trading..!
Given the inherent volatility
in cardamom prices, the increase in exports, and rise in domestic demand, exchange-traded cardamom
futures are ideal for managing the price risk of planters, traders, and
exporters.
MCX provides such a futures
platform, with the contract specifications being well-tuned to the physical
market
requirements.
MCX allows delivery of 7 mm
and 6 mm cardamom (most
sought after by exporters).
With the advent of futures trading in India, intermediation in the value chain
has been reduced because of
which farmers are getting a higher price (UNCTAD 2009).
However, in Guatemala, the
cardamom value chain suffers from seven (7) different levels of intermediaries
(USDA 2014).
Moreover, a 2014 study by IIM
Kozhikode states that the price elasticity in cardamom (postintroduction
of futures trading) has
decreased. The vulnerability of
cardamom farmers to price
fluctuations has thereby been reduced.
Published by
Department of Research &
Planning, MCX
Please send feedback to: research@mcxindia.com
Corporate address:
MCX
Exchange Square, Chakala,
Andheri (East),
Mumbai - 400 093, India,
Tele. No. 91-22-6731 8888,
Email id : info@mcxindia.com
Src: MCX CommNews | NOVEMBER 2015 | Volume 5
Issue 58
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