After years of depressed prices, vanilla is finally
appreciating itself.
In recent months, we have witnessed a sharp increase
in prices due to low stock availability. Shippers in Madagascar have
had real problems getting the necessary volume needed to fulfill
their contracts and therefore have started a local bidding war that
has resulted in a price increase of more than 100%. The good thing
is that the vanilla prices were so low that today’s increased prices
are still within range. Our past experience is that when vanilla was
around $50 US/Kg we saw an interest from a lot of different origins
to grow and the quality then improves. The 2012 Madagascar crop has
now been all sold and we are going to have to wait until the 3rd
quarter of this year to see any new crop. Even though every vanilla
report for the past 5 years has predicted this price increase, we
have seen a reluctance from buyers to commit early, which might
cause them to resort to buying on the spot during summer at high
prices. This sharp increase in Madagascar has obviously had impact
with other origins. Indonesian, speculators that had taken a
position a few years back have now started moving some lots but the
quality is poor and the flavor is bad (vanilla traders in Indonesia
often play with cloves and store the 2 commodities in same
warehouse, therefore affecting the vanilla’s flavor). With higher
price we hope that PNG will be back in the game.
Crystal ball section
It’s our belief that within the next few months buyers will
pressure their suppliers to ship early, creating a negative
impact upon the crop. We predict an initial of 20% increase from
today’s price that will stabilize itself if the crop can fulfill
all its contracts. We can see two potential Jokers to stabilize
the price: Inventory in Europe still estimated at over 500MT
will start being offered, which will ease the pressure.
With Indo/PNG’s high quality in the fifties, these two origins
will be pulled back in the game. PNG has been really quiet these
past 5 years, but the vines are still very healthy and could
easily come back in the market with a huge crop if the price is
right.
Conclusion
Vanilla prices are currently at ideal level for us to see
farmers and shippers around the world motivated tending to this
complicated trade. Stable vanilla prices ultimately means good news.
The worst that could happen now is that prices start spiraling out
of control and further damage this delicate trade.
~Francois B
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