India cardamom prices may fall 10 pct by mid-March

By Debiprasad Nayak

MUMBAI (Reuters) - Indian cardamom prices are likely to decline about 10 percent by the middle of March as both domestic and export demand retreated in the face of a sharp spike in prices in the last few months, analysts and traders said.

"The prices have been rising continuously. It's not an essential food...people have stopped buying," said N. Ranganath, manager, Kerala Cardamom Processing & Marketing Co Ltd.

Kerala accounts for 70 percent of the country's total production followed by Karnataka and Tamil Nadu.

"Prices are unlikely to sustain at such high level...it is likely to come down to 620-630 rupees within a month," said Kunal Shah, an analyst with Motilal Oswal Commodities Broker Pvt Ltd. Cardamom prices rose by 40 percent in the last four months to 700 rupees per kg on a decline in production on lower acreage.

Production in 2007/08 is expected at about 7,700 tonnes, down from an earlier estimate of 9,700 tonnes on falling acreage, said a Spices Board official on Tuesday, who did not want to be identified. Last year the output was 11,300 tonnes.

The area under cultivation in 2007/08 came down to 69,300 hectares (171,200 acres) from 73,200 hectares a year ago, he said.

Buyers moved to the sidelines due to the arrival of low quality crop as the harvesting season ended, said Thomas Koshy, director of Allkoshys Spices, a Kottayam-based spices trading firm.

Harvesting of cardamom in India starts in August and continues till January.