Cloves prices continued to surge on short supplies and covering by importers in recent weeks from growing countries.
Prices in the domestic market have soared to Rs 350 a kg, as around 70 per cent of the country's demand is met by imports.
Prices in the domestic market for different origins on Monday were:
Colombo Rs 300; Madagascar Rs 310; Zanzibar Rs 325; and Indian Rs 350 a kg. International market prices quoted were: Colombo $5,700; Madagascar $5,200; Zanzibar $5,400 and Indonesia $6,500-$7,500 a tonne.
"Demand from North India is high as the area is under the grip of cold weather. December-February will see high prices, at Rs 400 a kg," dealers told Business Line.
According to an overseas report, international "cloves prices have edged up further in recent weeks as key importers have moved in to take some cover in a market of scarce supplies".
Quoting a Rotterdam broker, the Public Ledger said: "After eagerly awaiting new crops in Madagascar and Brazil, buyers were starting to purchase again as the first new crop arrivals reached various destinations."
Demand areas
Much of the upturn in activity, the report said, had come from Singapore.
French cloves traders were quoted as saying that there had also been demand from India, West Asia, the US and Europe.
A European broker said the improved interest had been enough to spark gains in prices. "Underlying firmness prevails as a result of an anticipated smaller crop in Madagascar this year.
And additional support has been generated, of late, by unconfirmed reports that this year's Sri Lankan crop will also be lower than expected."
A French trader was quoted as saying: "The lack of material available at origins had stimulated the upturn in buying interest as importers saw the need to take some cover."
Bangalore-based importers said following a flow of enquiries from India and Singapore, exporters in Madagascar had quoted $4,700 to $5,000 a tonne fob Tamatave.
Comoros has also raised its prices and supplies as its current crop appears to have sold out and "some firms there have asked for contracts to be postponed because they are unsure whether they can fulfil them."
The report said that estimates of earlier this month have suggested availability of 7,000 to 8,000 tonnes over the 2009/10 season in Madagascar.
However, another forecast later placed the total output at 3,500-4,000 tonnes.
Output
The report said: "Local collectors and exporters were heavily purchasing the new crop material without even waiting for the cloves to be dried. These buyers would sit on stocks looking for better prices, so availability would be low in coming weeks."
By conservative estimates, the output of cloves in India this year is 15 to 20 per cent higher to between 2,000 to 2,500 tonnes, said Mr Ramakrishna Sharma, Managing Director, Travancore Rubber and Tea Company, and a major producer of cloves in the country. He said harvesting will commence from end-December and may last till March. Non-availability of skilled workers has become a major problem, he said.
Mr Sharma said for the past one decade Indian cloves were not getting remunerative prices because of import of poor quality material at low prices from other origins. "Therefore, the real value of Indian cloves has not gone up for over a decade," he said.
The demand for cloves could expand significantly if its medicinal values and usages are properly studied and promoted, he added.
The Indian demand is estimated at around 15,000 tonnes, trade sources said.
Source : Business Line