Poppy seed prices this year are expected to fall sharply following the good crop in all the producing countries and a weak demand due to recession in major consuming nations.
Consequently, the prices in the domestic market are likely to drop to below Rs 200 a kg.
Sources of origins
Probably for the first time this year, import of poppy seeds is allowed from several sources of origin such as the Czech Republic, Turkey, Holland, Spain and Australia.
At the same time, crops in these origins are said to be three times the normal.
Thus, increased availability of white poppy seeds has led the market to crash from $5,500 a tonne to $2,500 and now, it is expected to fall further to $2,000 a tonne when the new crop starts arriving next month.
Total world output of blue poppy seed is estimated at over 70,000 tonnes and hence, its prices are expected to fall from $2,200 to $1,100 a tonne. It might stabilise at $800 a tonne, Bangalore-based trade sources told Business Line.
Reduced offtake
They said that "its demand has dropped sharply as the end user industry in the US, Europe and Russia has reduced its offtake following the economic recession which has reportedly squeezed bakery sales".
A somewhat similar situation is experienced in India also and, hence, the white poppy seeds prices have crashed from Rs 450 to Rs 275 a kg currently, the sources said.
August delivery is offered at Rs 190 a kg, as new imports cost Rs 170 a kg.
According to them, the "monopoly in this trade has broken, hawala trade is out, fraud imports are stopped, and yet kg based duty at Rs 40 a kg is needed". This year, they said, imports are expected from Spain and China also.
All these countries are 100 per cent legal growers and it has been confirmed by the International Narcotic Control Board, Vienna, they said.
According to the latest report in the Public Ledger, the new crop in Turkey is bigger than what was projected earlier at around 15,000 tonnes.
It is estimated now at a minimum of 20,000 tonnes against about 8,000 tonnes last year.
"The combination of a large crop and low demand has sent prices crashing," it said. The only serious buyer, India has withdrawn after seeing prices rapidly crashing, it added.
India used to import up to "90 per cent of Turkey's crop every year and the Government has reduced the import duty on poppy seeds to 25 per cent from 47 per cent recently," according to an overseas report.
Turkey poppy seeds were trading at $3,545 a tonne last week, compared with $4,270 a tonne in the previous week, and some traders said prices could drop further, the Public Ledger said.
Bleak outlook
"This year, prices will go down to $2,000 a tonne levels as there are no sales at all," he said. "If this trend continues, it may go down below $2,000 a tonne also," an Indian buyer said.
The report added that Czech Euro blue f.o.b. poppy seeds, currently quoted at ?1,300 ($1,813) a tonne, are also expected to retreat in the near future on the back of a good harvest in the country. "This(price) will go to the ?1,000 a tonne level as the crop in the Czech Republic is approximately 50,000 to 60,000 tonnes this year," it quoted an importer as saying.
Indian production is also projected to be higher this year but much short of the domestic demand, trade sources said.
The trade has urged the Centre that the Indian Narcotic Board, Gwalior, be advised to register contracts in 2-3 days and issue permits for imports without loss of time to all the importers irrespective of their status as big or small.
White poppy seeds prices have crashed from Rs 450 to Rs 275 a kg currently.August delivery is offered at Rs 190 a kg, as new imports cost Rs 170 a kg.
Source : Business Line