Spices Market Update Q2 2025

United States

Supply Update

• Reduced Acreage: US onion acreage for dehydration is down 15-20% 
  compared to 2024. This reduction is due to higher-than-normal carry-in inventories at the beginning of the year, stable demand, and increased carrying costs.
• Delayed California Harvest: Early California harvest experienced weather variability, leading to a 2-3 week delay. The onion crop harvest began around mid-June 2025.
• Yield Uncertainty: Initial yield reports from California indicated a 3-5% yield decline, particularly in the Central Valley region due to unseasonal rains and potential onset of foliar disease. 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, while water allocation for agriculture is currently adequate.

Demand Update

• Stable demand from CPG and Food Service sectors.
• Robust demand for piece fractions.
• Decline in imports from China and India year to date. Increased efforts from customers to actively derisk offshore supply chains, volatile freight, and uncertain import duties.

Cost Pressures

• Inflationary Environment: Growers face rising costs for labor (~4-6% increase), fuel, freight, and utilities (3-5% increase). Overall PPI for Intermediate demand for food is up ~5% y/y.
• Stable Fertilizer and Packaging: Fertilizer and packaging costs are stable for the time being.
• Increased Irradiation Costs: Irradiation costs have risen ~7% year-over-year with extended lead times.
• Inventory Holding Costs: Inventory holding costs continue to remain elevated due to higher interest rates.
• Grower Resistance to Price Reductions: Rising costs are creating strong resistance from growers to price reductions for 2026 and beyond.

United States

Supply Update

• Reduced Acreage and Slower Emergence: US garlic acreage for the 2025 crop is down 7-10% compared to 2024. Additionally, crop emergence has slowed due to recent weather variability, potentially delaying harvest by 1-2 weeks.
• Crop Progress: Central and Southern CA crop has matured with water cut complete. Crop continues to size as field curing begins. Arizona received 2–4 inches of rain in early June. There is potential yield risk.
• Inventory Levels: Current garlic inventories are sufficient to meet regular domestic demand for most fractions except granulated, which has been in very high demand due to a slowdown in offshore supplies.
• 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

• Strong Demand with Potential for Growth: Customer demand for US garlic has been strong in H1 2025 and is expected to increase in the second half. This is driven by: 
  • Higher landed prices of Chinese garlic due to increased tariffs and supply slowdown in Q2 2025.
  • Active derisking strategies adopted by many US customers wanting to diversify sourcing away from China.

China

2025 garlic harvest has been completed, and the yield was 15% higher than
last year but not as high as pre-harvest market expectations. The total carry 
over quantity for both fresh garlic and garlic flakes was the lowest it has been
in the last 5 years. 

Both fresh garlic and garlic flake prices have been strong and stable in the last few weeks due to the improved China and US tariff policy. Overall, garlic flake prices had little room to drop due to the low availability of supply. 

Green Chiles / Jalapeño

Spring Crop: Completed delivery without much issue. The entire contract was delivered without any quality issues. Favorable weather conditions kept the deliveries constant, and consistent in quality.

Summer Crop: Spring dust storms brought some challenges in the early growth cycle of the crop. As the winds died down, we have been able to continue without further delay. We anticipate the summer crop of both Green Chile and Jalapeño to begin harvest by the second week of July.

Red Chiles

Crop looks steady despite adverse weather in growing areas. China crop is 
expected to be 15-20% lower than last year. Carry over inventory will ensure 
prices remain steady. Lower US and Mexico crop prices along with tariffs on 
China and Spain have ensured reduction of differentials between US and Spain 
to about 10% instead of 35-40% earlier. This is convincing a lot of customers to 
move to domestic crop to avoid tariff uncertainties.

Pepper

Harvest has completed in Vietnam and with the arrival of rainy season, 
farmers have started preparing for the new crop cycle. A decrease in price 
has prompted farmers to sell some of their stocks; however, the total selling 
percentage remains lower than last year. Cambodia pepper harvest has also 
come to an end. The upcoming harvest from Indonesia is anticipated
to commence in July, with production projected to be lower than 2024
due to bad weather.

The last two months saw Vietnam pepper prices moving down from VND
160k/kg to the season’s lowest price at 135k/kg. Uncertainty around tariffs and a weaker demand from consuming markets of USA, Middle East and China primarily led to this decline in prices. Any spurt in demand could potentially drive up the prices in the latter half of 2025. 

The first five months of exports from Vietnam were at 100k MT Vs 113k MT in 2024. Asia is the largest destination importing 25k MT (+13%) followed by North America 24k MT (-25%). Exports to Europe were 22k MT (-20%).

Cassia

Low VO Cassia season in Vietnam has come to an end. Prices have experienced a slight increase due to the involvement of Chinese participants and the demand from exporters as they managed the 90-day tariff window.

Nutmeg

The market is currently very stable. Despite heavy rains, a certain quantity of 
raw materials is still being traded at stable prices. The rainy season, which was expected to conclude in March, has persisted until May-June, resulting in a drop in VO content.

Chili

Harvest is completed across all regions and more than 95% of the produce
has been moved out of the fields. Crop residue management activities are 
ongoing in most of the regions. Given the lower prices this season, farmers are stocking the harvest in cold storages. Cold storages are full in the Karnataka region, 93% occupied in the Telangana region and 80% occupied in the Andhra Pradesh region.

Exports in April 2025 were 10% higher than April 2024. IPM crop prices are
~5-8% higher than Mandi material as IPM compliant material availability is 
low. Prices will remain stable in the short term with very minor to no correction expected due to low trading. In the long term, prices may increase due to demand for best varieties for which availability is low. Recommended to cover now for longer coverage.

Cumin

Cumin crop threshing activities are completed in all the regions, summer 
ploughings going on in most of the areas. Market arrivals have decreased mainly due to farmers not willing to sell at lower prices and traders not willing to buy without orders. Farmers are releasing their material in a staggered manner to meet their expenses, and Rajasthan farmers have started holding stock due to a decrease in prices.

Markets are expected to be stable in the short-term depending mainly 
on stockists activity. For the long term, prices will depend on sowing data. 
Recommended to cover now for specially IPM compliant material as the price difference between IPM and conventional is low at 20%.

Coriander

Coriander crop threshing is completed in all regions. The crop was better
quality and yields compared to last year. IPM crop availability is better this
year compared to last year, prices are 5-10% higher than conventional
material. Overall demand getting lower with the season coming to an end.
Exports in April 2025 is lower by 22% compared to April 2024.

Short term outlook seems stable and long term prices will depend on sowing acreage which is expected to decrease for 2025-26 season. Carry forward stock for next season is lower compared to 2024-25 season. Recommended to cover now for annual requirements.

Turmeric

Harvesting is complete in all regions and post-harvest activities like grading, 
polishing and packing are going on in the fields. Weather has been favorable 
and no damages reported in harvested crop. 50-55% of the crop has been 
moved out of the fields and 65-70% crop has been sold in the market.

Farmers are concentrating on land preparation for sowing. Sowing is expected to increase by ~20% in the coming season. Farmers are storing seed as seed prices remain stable. Seed retention is higher by 25-30% over LY. Exports in April 2025 were 6% lower than April 2024.

After a sharp price rise in May, Turmeric prices have corrected but volatility 
continues with variations almost every week. IPM crop prices are ~5% higher 
than conventional prices. With the reducing arrivals, the view on prices of 
Turmeric is bullish, recommended to cover now for annual requirements.