Spices Market Update Q2 2024

United States

Supply Update

• Reduced Acreage: Acreage is down 15-20% compared to 2023.
• Delayed California Harvest: Weather variability led to a 7-10 day delay in harvest. The harvest is ~15% complete as of mid-June.
• Yield Uncertainty: Initial yield reports from California show slight shortfalls. It's too early for a definitive crop prediction but this trend merits monitoring.
• Stable Water Supply: California reservoirs are at or above historical levels. Water allocation for agriculture is currently adequate.

Cost Pressures

• Inflationary Environment: Growers face rising costs for labor (4-6% increase), fuel, freight, and utilities (2-3% increase).
• Stable Fertilizer and Packaging Costs: Fertilizer and packaging costs have stabilized.

Cost Pressures (continued)

• Increased Irradiation Costs: Irradiation costs have risen 5% year-over-year with extended lead times.
• Inventory Holding Costs: Inventory holding costs have doubled due to higher interest rates.
• Grower Resistance to Price Reductions: Rising costs are creating strong resistance from growers to price reductions for 2024 and beyond.

Demand Update

• Increased Demand: Customer demand for US onion remained stable through Q2 2024 but is expected to improve in the second half.
• Declining Imports: Imports, especially from China and India, are showing a slowdown due to availability challenges in these origins as well as increased freight rates. US onion spot demand is up as a result and the trend is likely to continue.  

United States

Supply Update

• Reduced Acreage and Slower Emergence: US garlic acreage for the 2024 crop is down 7-10% compared to 2023. Additionally, crop emergence has slowed due to recent weather variability, potentially delaying harvest by 1-2 weeks.
• Inventory Levels: Current garlic inventories are sufficient to meet regular domestic demand but at higher prices.
• Rising Costs: Similar to the US onion market, US garlic growers face rising costs for labor, water, and other inputs, which are reflected in current market pricing.

Demand Update

• Stable Demand with Potential for Growth: Customer demand for US garlic has been stable in Q2 2024 but is expected to increase in the second half. This is driven by:
  • Higher landed prices of Chinese garlic due to lower yields and increased freight rates.
  • Speculation of potential US import duty increases on garlic after the elections.

China

Production volume of 2023 crop is much less than consumption. Forecasts for the 2024 crop production are less than 100K tons, so the total stock of garlic flakes quantity keeps reducing and new crop flaking has just started.

Current transactions are better than a few days ago as some international buyers have started placing orders. Once more buyers start placing orders, the market will become more active resulting in prices going up in the coming weeks.

Green Chiles / Organic Green Chiles

The winter harvest window has closed with all orders complete. No shortages reported. Currently the summer crop is in the ground. Crop outlook looks good, no indications of shortages or delays.

Organic green chile crop is complete. No shortages reported.

Jalapeño  / Organic Jalapeño

The winter crop is completed with no shortages and all orders complete. Currently the summer crop is in the ground. Crop outlook looks good. No indications of shortages or delays. 

Organic harvest complete. There was a light shortage due to insect infestation.

Red Chiles

Planting has concluded across all locations for the 2024 season. The spring temperatures began cooler than anticipated but quickly returned to a favorable growing climate, therefore providing the necessary time for the crop to establish its vegetative state of growth. 

Presently, the weather pattern has shifted to a slightly warmer climate. We will continue to monitor climatic patterns and changes as we approach the summer and monsoon seasons. As the season and crop progress, the market will continue to closely monitor the crop’s vegetative and reproductive growth. 

Comparable to Mexico, pricing in the US is a sensitive subject for the red and green industries. As inputs and labor continue to be a concern, the industry maintains its optimism for the 2024 season.

Pepper

Harvest season in Vietnam and Cambodia came to an end, resulting in low stock levels.  Harvest from Indonesia is expected to start in July while fresh crop from Brazil is expected to start flowing in August. Upcoming crop from Brazil was impacted due to extreme weather conditions linked to El Nino.  

With harvest season coming to an end in Vietnam and Cambodia, prices surged by 82% compared to the end of Q1 2024. This is the highest pepper prices have reached since 2016. Acreage removals and extreme weather events in key growing regions has caused this sudden increase in prices.  

Through May 2024, YTD Vietnam exports were 113k MT (-14% compared to YTD 2023). This drop is caused by a decrease of whole pepper exports to China.  So far, USA has been the largest destination for Vietnam pepper importing 29.7k MT (+36%). Exports to Europe are up 50% while exports to Middle East are up 7%. Exports to Asia are down 63% due to absence of China in Q1 2024.

Cassia

Spring crop is complete, and the next small crop is arriving into the market now (late June). Through May 2024, Vietnam exports were 33.3k MT (-1% compared to YTD 2023). India was the largest destination importing 10.5k MT however the volumes were down by 17% compared to same time last year.

Nutmeg

Prices are stable in nutmeg following an expected February harvest and anticipated demand outlook. Indonesia’s main harvest will arrive in July, with indications of continued stability.

Ginger

An outbreak of fungal disease destroyed Nigeria's ginger crop in 2023-2024, putting pressure on the global supply outlook. Due to the shortage of supply, prices almost doubled compared to last year. New planting in Nigeria was completed in April with harvest expected to start in early fall and continue through December. 2024-2025 yield health will determine pricing and availability.

Chilli

Major markets including Guntur were closed for trade for a large part of May. Warangal Market opened last week but so far arrivals and sales have been low. More details on current trade status will be known towards end of June. All Chilli growing regions have received good rainfall in the last week.

Domestic companies, Extracts and Oleoresin companies may enter the market which should stabilize/boost prices. Premium quality (hear/colour) compliant raw material may see a boost in prices, whereas medium/lower quality may remain range bound. Festivities in India start in Q3. This will result in demand picking up from domestic sector.

Cumin

Overall crop was almost 80% higher in 2024 season compared to 2023 season. Local trade prices have increased 40% since end of April but are still 50% lower than the prices we saw in Q3 2023. While the trade knows that enough stock is available, uncertainty in rains and better prices versus 2023 are leading to higher sale prices. 

Demand has started increasing from various sectors as buyers are better off compared to 2023. Demand from China has increased which has helped increase prices. Domestic demand for retail grade remained firm. June prices are expected to be volatile as China crop harvesting will start and domestic farmers too are expected to sell before Kharif crop planting.

Coriander

Gujarat data on sowing shows a decrease in acreage of 48% compared to last year. Traders estimate the decrease to be close to 55%. Madhya Pradesh and Rajasthan acreage has decreased by more than 25%. Crop is expected to be 60% - 70% of last year. 

Domestic demand from Masala companies has slowed down and NCDEX prices were stable for last week. Coriander spot prices were stable for the last week. Prices moved in a narrow range of 74/kg to 76/kg for 99% Badami quality. Prices are expected to be stable in the short term. Long term trend is expected to be bullish.

While crop this year has been low, carry forward from last year has helped to keep prices stable. With lower physical supplies available for SH, prices will remain firm and view is stable to slightly bullish. 

Turmeric

This year crop was 25% - 30% lower than last year resulting in physical stock being much lower than previous years. Sowing in 2024 will depend a lot on rainfall. Sowing will take place July – August. 

All growing regions have received excess rainfall before June 1st. Excess rains have delayed sowing in South Karnataka and Tamilnadu. Seed demand and movement has increased since week 21.

Price futures steady +/-2% in week 24. Moved up 15% in week 21. Week 22 & 23 it was volatile. Physicals price movement was Rs 5/kg in Week 24.  Powder prices have been stable for a few weeks at Rs 170-190/kg.

Festive demand and mixed news on rainfall and sowing may led to pipeline inventory getting filled up.