Cardamom, a cherished spice known for its rich aroma and flavor, is witnessing significant market fluctuations. From high demand and speculative trading practices to adverse weather conditions affecting supply, the cardamom market presents a complex landscape. This article delves into the factors influencing cardamom prices, trading practices, and the global impact of these dynamics.
The annual demand for cardamom in Bangladesh is approximately 8,000 tonnes, with Chattogram's Khatunganj wholesale market seeing daily trades exceeding 1,000 tonnes. This intense trading activity is driven by a speculative practice known as Delivery Order (DO) trading. In DO trading, traders buy and sell contracts for future delivery without taking possession of the spice. This speculative trading leads to price volatility, causing uncertainty for consumers and businesses alike.
Amar Kanti Das, Senior Vice President of the Wholesale Spice Traders Association, highlights the instability caused by DO trading. "It's just like gambling," he remarks, noting the sharp price fluctuations in Khatunganj, where cardamom prices have soared to Tk3,900 per kg, despite import costs being much lower.
DO trading is unregulated and risky. Traders can manipulate prices by trading large volumes of contracts without holding actual inventory, leading to sudden price spikes and falls. This practice not only disrupts the market but also harms genuine traders and consumers. As traders in Khatunganj continue to engage in this speculative trading, the price of cardamom remains unstable, significantly impacting the local market.
Guatemala: A Key Supplier
Most of the cardamom imported into Bangladesh comes from Guatemala, under brand names like LMJ and Jabisi. Despite the high demand, the market faces instability due to speculative trading practices. In 2023, 85 establishments imported 4,677 tonnes of cardamom, with an import cost of Tk1,257 per kg. The reduced production in Guatemala in 2018 initially caused price instability, which opportunistic traders in Bangladesh capitalized on.
India: Weather and Market Shifts
India, another major player in the cardamom market, has experienced its own set of challenges. Flooding in key growing regions like Kerala and Tamil Nadu has led to decreased production and increased imports from Guatemala, causing price hikes. The unstable market in India has ripple effects on Bangladesh, where cardamom prices increased by nearly 20% over two months.
The global cardamom market is influenced by various factors, including adverse weather conditions and supply chain disruptions. In regions like Assam and Meghalaya, floods and heavy rains have severely impacted cardamom crops, leading to irregular auctions and limited supply. Despite these challenges, India's cardamom exports have shown resilience, with significant increases in export volumes.
Authorities and trade associations are aware of the illicit trading practices destabilizing the cardamom market. The Directorate of National Consumers' Right Protection in Bangladesh plans to launch campaigns to counteract these practices. Leaders of wholesale traders associations also advocate for ending speculative DO trading to protect consumers and genuine businesses.
The cardamom market is currently navigating through turbulent times, with high demand, speculative trading practices, and adverse weather conditions affecting supply and prices. As the market continues to evolve, stakeholders must address these challenges to ensure stability and sustainability. For consumers and traders, understanding these dynamics is crucial for navigating the complexities of the cardamom market.
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