Rob’s Crystal Ball
An Oleoresin Market Report
In our last report, the Covid-19 pandemic took center stage in almost every aspect of spice supply chains. While we all know that the weather ultimately rules the day, pandemic second-wave concerns continue to keep us on our toes. Staying ahead of all kinds of upward and downward movement on both the demand and supply side is akin to riding a rollercoaster. As if COVID-19 isn’t enough of a disruption, we are hearing of massive container shortages in Asia which could add additional pressure on delivery times. We feel that, in times like these, it is best to maintain higher than average inventory to stay one step ahead in order to hopefully sleep better at night. As always, we are here to answer any of your questions, in the hopes you sleep better, since we are in contact with India every day of the year.
While the sowing of chili seeds in India is complete, it is still too early to forecast crop yields. The growing regions experienced heavy rainfall in September which forced farmers to replant in October, delaying the harvest by 30-40 days. As a result, prices are expected to firm until the end of the year as demand remains highs. Also of note, we hear there is recent surge in demand for hot chili from China, which is nearly out of the COVID-19 restrictions and back to normal. Our recommendation is to cover your short-term requirements until April 2021, when the next harvest is expected to be complete and hopefully below last season’s prices. We recommend giving us your volumes ahead of time.
Paprika’s sowing season in India was completed over the summer, but excess rainfall throughout September is estimated to damage 10% of the crop. The harvesting season begins shortly in the many various growing regions in India. On the other hand, China’s October harvest witnessed higher volumes. Pricing remains volatile as human rights concerns and government restrictions imposed to control the spread of COVID-19 have caused supply chain interruptions. Please give us your 2021 needs as we monitor the right time to enter the market. We think the time is now.
The black pepper market is experiencing a price break-out following all-time-lows in the first half of 2020. Sri Lanka, which is the key raw material for the best quality and oleoresin pricing, is in the midst of a second wave of coronavirus spread with possible lockdowns and restrictions which could negatively impact the smaller December harvest. The all-important market-maker Vietnamese black pepper season is complete and so far, the quantity of exports is down, and prices are higher. However, the prices are still short of farmers’ expectations which could cause further supply shortages. We believe that it is better to cover your requirements this month, as we expect black pepper prices to continue to rise.
Ginger’s antiviral properties have caused demand to increase exponentially amidst the current pandemic situation. Larger crops are expected in both Nigeria and India as a reaction to higher prices, however excess rainfall in both countries will make cultivation and drying difficult. The lack of supply in China & India has pushed more buyers to Nigeria, where the harvest season starts in December. Uncertainty associated with the weather, yields, and the coronavirus pandemic makes judging the after-market situation very difficult. In the short term, prices should remain firm leading up to the January-February harvest.
The 2020 celery harvesting season is complete, and the sowing of 2021’s crop has begun. A better estimate of 2021’s crop should be available closer to the end of December. With export demand higher than last year’s and supply decreased due to competing crops and pandemic-related labor shortages, now could be a good time to cover your needs before prices climb higher.
Nutmeg & Mace Oleoresin
Both Sri Lanka and India are experiencing shortages of high-quality nutmeg due to national lockdowns and scarcity of raw materials. The story for mace is similar with low availability and higher prices. Our recommendation is to cover your short-term requirements now, as current crop shortages could continue to firm prices before the next peak harvest.
2020 has been a particularly interesting year for the turmeric crop which has seen prices hit a 15-year low, cultivation down 10-15%, and export demand up 25%. The coronavirus pandemic has increased demand for turmeric’s immunity boosting properties while farmers have planted less due to low prices. Our summer prediction that the price will rise remains as supply drops and the demand continues to increase. As we often note, the price increases are most usually seen in the high curcumin levels. Trilogy’s primary market is the 5-10% curcumin amounts. We advise you to cover your needs before 2021, which could see a modest price increase.
As discussed in previous reports, Cassia Oleoresin prices have continued to rise due to an array of factors ranging from low supply of raw materials to currency fluctuations. The demand for this unique quality of cassia has increased dramatically in the past few years, while the supply has stagnated. Sadly, there are not enough mature trees to support the strong demand. Please continue to give us your volumes well in advance in order to make every effort to meet your needs.
We do see better news on the horizon when the trees planted years ago, mature, and begin to come to fruition.