Market Report – April 2020

Social distancing is the new norm. Meet-and-greet is a thing of the past. The situation is the same in India as anywhere in the world.  Amidst the national lockdown in India, which is currently till 03 May, we are continuing to reach out to our customers and stay connected. To facilitate restart of the economy, the Indian government has given special exemption to many essential services, including the agricultural sector and few industries to resume their operations since this week.  Our constant interactions with Government authorities have enabled us to be fully updated of the changes as they were happening, and we have been doing our best to get back into action to serve our customers in a timely manner. Our customers and partners too, as we understand, are in the process of finding new ways to operate in the changed scenario and are looking ahead with a positive approach.

BHOOMI, is one of the specifically exempted units and we have now started operating, with minimum staff, by strictly implementing safety guidelines and sanitisation measures in our office and facilities.  

There are some challenges we are facing like suspension/limited availability of regional transportation systems, , delays in approvals/ clearances from authorities, exorbitant freight costs etc. which we are addressing and expect to resolve at the earliest. 

Post Covid-19, there may be a re-organisation of supply chain networks, and there is a positive expectation that India will emerge as the preferred source for many of the Spices/Herbs/Essential oils and Extracts.  We expect the demand to soar in the second half of the year. BHOOMI is geared up to meet these demand challenges from all world markets. 

In our report this month, we have given a broad outlook on our product categories. The information below is based on the details we have received from our network of personnel in the growing areas and media reports.

Spices

For major South Indian spices – Ginger, Nutmeg, Mace, Pepper, Turmeric – March to June is the harvest season. With lockdown in effect and restrictions in place in terms of transport and people movement, the full impact on the harvest of the spices will be known only in the next two months. A few relaxations  in favour of these farmers whose livelihood depends on these crops can be expected soon. Pre-monsoon showers have commenced in the growing areas, as expected. The meteorological department has also predicted normal rainfall all over the country from June to September.

Turmeric

Harvest is delayed and more material is expected to arrive when the lockdown ends. The last year crop was generally lower by 30% – reduced demand conditions before lockdown had also kept the price on the lower side.  With the pandemic spreading rapidly, demand for Turmeric and Curcumin has shot up for its immunity boosting and medicinal properties. With this sudden increase in demand, raw material prices are expected to go up once lockdown is lifted.

Cardamom

In case of Cardamom, there is tepid demand, and a likely better crop is expected in the coming season because of favourable weather. This may depreciate the price.

 

 

Chili

Regarding Chili, as per the information we have, no trading is happening at present in Guntur, the benchmark and Asia’s biggest Chilli market. Reports in mid-March 2020 stated that due to high temperature in the growing areas, the quality of the Chilli was deteriorating.  Paprika Chili production has been drastically lower this year due to the crop damage because of floods in the rain fed areas of Hubli- Dharwad. Byadgi, the largest paprika market in India is closed now due to the Corona crisis and prices are exorbitantly higher.

Capsicum

Capsicum markets across India was already shut by the authorities in the wake of corona outbreak.This may have a direct impact on high heat chilli prices in the long run. Extraction Grade Teja prices are skyrocketing.

 

 

Herbs

Native herbs like Moringa leaves, Senna leaves, Neem leaves, etc., are available in sufficient quantity. However, we have few challenges in terms of shortage of labour and difficulty in transportation. We expect some relaxation in restrictions by the end of this week and things will be much smoother.

Herb Essential Oils

Lemongrass Oil

Due to a lower price in the market for Lemongrass oil, most farmers had opted for alternate crops. With the outset of Covid-19 in China, there was a sharp fall in imports from China. This has resulted in an increase in price for Lemongrass oil. By mid-February, more farmers had started planting Lemongrass with the hope for a further increase in price. This new crop is now 90 days old and ready for cutting. However, due to lack of labour and strict enforcement of social distancing in these areas, very minimal farm level distillation is happening at present.

Palmarosa Oil

Presently there is sufficient stock of Palmarosa oil and the situation is stable. With the national lockdown in effect, very limited distillation is happening at the farm level.

Davana Oil

With regards to Davana Oil, the distillation was in the last stage when the lockdown was announced. With strict curb on farm level distillation, this process is yet to be completed. Information on total oil production and davanone content is awaited.

 

 

Basil Oil

Since there is an unprecedented demand for Basil in the personal care products, there is shortage of Basil oil this season. Prices are expected to move higher. Next season starts mid July – early August.

 

 

Mint Products

At the beginning of the year itself it was known that many farmers were moving to alternate crops instead of mint because of lower demand last year. Plantation of Spearmint and Piperita has seen a sharp decline. The crop position until the beginning of lockdown was promising but with restrictions in transportation and social distancing the impact is yet to be analysed.

At the end of the lockdown period, a surge in demand is expected but we do not expect much growth in the long run. This is mainly due to factors such as slower economy worldwide, higher prices for mint products due to shortage, etc. Not much trading is happening in the MCX at present due to the current lockdown in the country, but prices are moving upwards for spot buying. We believe it may be appropriate to buy for current immediate needs, however it may be advisable to see the new season market trend for planning annual requirements.

BHOOMI continues to accept orders and operations are being carried out with strict rules of hygiene, care and sanitization measures in place.  Delays may be expected in sample dispatches and shipment schedules due to COVID-19 lockdown/restrictions in India.    

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