As usual it is very difficult to get accurate information on the production. For the time being, our feeling is the following:
Carry-over of 2013/2014: 1000 to 1500 mt – Goods coming from South – lot of small cloves with greyish and black colour.
Crop 2014 2015
Southern origin: 500 to 1500 Mt – already collected but the shippers did not accept to pay high prices for these goods. We think that some collectors are still carrying stocks.
Tamatave – Fenerive area: 4 000 to 5 500 mt – the crop has started. Shippers complain because the goods are wet and slightly dirty. Some of them say they lost money on their first shipments.
North Madagascar (Maroantsetra area) 1000 to 2000 mt – cloves harvested before the opening of the campaign are relatively small for Northern material.
So the quantity available for export should be between 6500/7000 and 7500/8000 Mt this year.
The crop has officially started on the 25/10/14. The local market is increasing everyday (today between 22 000 Ariary/kg). Previous weeks, some big local players were building stocks, and it seems that farmers and collectors are making retention now.
In fact the shippers who have stocks from the previous crop, have cost prices in USD 9500 $/mt FOB because of the increase of USD against Euro and Ariary.
So, their strategy is to buy at higher prices for the following reasons
1° prevent other shippers to buy or to sell with good margin
2°average their stock value with potential lucrative profits
They are convinced that they will become the kings of the clove world – they are waiting for Indonesian and Indian buyers…
The consequence is the export market is relatively quiet, because most of the buyers were expecting better prices with the Malagasy crop.
Since early October, we got few inquiries from small Indians traders. The US buyers seem to wait for the Brazilian cloves. The Europeans were waiting for the Malagasy offers but they find prices too high, even if stocks are low.
This year, Malagasy cloves market might change a little bit: the Malagasy authorities have accepted the recommendations of the cloves exporters committee. They have published a list of authorized companies able to export and they have accepted amendments on CG3 specifications under the ones the containers can not be exported.
The goods have to be inspected by the lab with whom we are working since 2014. If the goods are not as per new CG3 specifications (moisture < 12,5% and stems< 3%), the Customs do not allow the exportation
Currently, all the shippers complain the raw cloves are still too wet. They have minimum 20% of lost during the drying and cleaning process to get goods as per the CG3 specifications. Few shippers are stressed because they have sold cloves as CG3, but they can not able to export the containers because the quality is not the right one.
Moreover 7 containers ready to be exported by non authorized companies (2 Chinese and one Sri Lankan) are blocked by the Customs.
On our opinion the market will remain firm until end of this year, due to the new quality regulation and the local speculation.
The crop is over at Anjouan – The market is firm and it is difficult to get offer at present time. Shippers say that the Phillips Morris’s agent and a continental Chinese who has build a warehouse this year, are still buying at high prices.
Few stocks are available but the FOB prices for CG3 are already 15% higher than Madagascar cloves FOB.
The crop is starting and the quantity would not be big this year – The first prices given by Brazilian shippers are around the Malagasy levels, which seem quite high for this origin.
We feel that the clove stems market should rise more than usual, because more and more people are using stems instead bud for clove powder or to offer cheap qualities of cloves.
Madagascar : Shippers say that we have to wait until the end of the crop although farmers collected them with cloves. It means that most the clove stems are blended with clove by the collectors. So, shippers might try to increase the potential value of their by-products to sell their cloves at reasonable prices.