40.41 F
New York
December 9, 2019
Home » Blog » Vanilla prices drop by a third from recent highs | 2019-12-02
Food Business News

Vanilla prices drop by a third from recent highs | 2019-12-02

Vanilla prices drop by a third from recent highs | 2019-12-02
Spread the Love!!

MOUNT ROYAL, QUE. – Current vanilla bean prices in Madagascar, which provides most of the world’s supply, are about one-third lower than a recent peak price of $600 per kilogram, according to a report released Nov. 27 by Aust & Hachmann Ltd.

“As we approach the end of 2019 it has become abundantly clear the global vanilla market is now officially a buyer’s market for the first time in more than four seasons,” the report said.

The quality of Madagascar’s 2019 crop is good and on par with 2018. Aust & Hachmann expects the 2019 crop to finish in a range of 1,100 to 1,200 tonnes, which, along with other growing regions, should satisfy global demand that has fallen in recent years.

“Prices in Madagascar have continued to fall but perhaps not as much as many had anticipated,” the report said. “The market on the ground remains very quiet as most buyers sit on the sidelines hoping for further price softening.”

If the 2020 Madagascar crop reaches its full potential, the harvest could hit 2,000 tonnes.

Besides Madagascar, production is increasing in all origins and should accelerate even more in 2020. Prices for vanilla sourced from other origins like Indonesia and Papua New Guinea have fallen in a range of 40% to 50% from recent highs.

“We are seeing varying degrees of price erosion,” the report said. “While quite significant in secondary regions, like Indonesia and Papua New Guinea, thus far in Madagascar the reductions have been more tempered. The anticipated collapse of vanilla prices has yet to materialize, and we see little chance of such an eventuality in the near term.”

Gourmet black vanilla from Papua New Guinea has taken market share from the traditional retail and food service quality usually supplied by Madagascar and the surrounding Bourbon islands. Papua New Guinea could produce 250 tonnes in 2020, according to the report. Vanilla production is rising in Indonesia, and prices have fallen 50% from recent highs.

“With the collapse of demand for vanilla, it is not difficult to see a path to oversupply in the global vanilla market in the near future and a subsequent collapse in prices,” the report said. “However, we would caution against such an assumption given the variables of the vanilla trade. Although it took some time for industrial demand to recover after the last crisis came to an end in 2004, today the global demand and consumption for vanilla is far more entrenched.”

Mount Royal-based Aust & Hachmann imports, stock and distributes vanilla products.

Source link

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Click whichever is suitable. Accept Read More