10/16/2024

The International Longshoremen’s Association (ILA) has reached a tentative agreement with the United States Maritime Alliance (USMX), temporarily suspending their strike that began on October 1, 2024. This strike ceased operations in 36 ports stretching from Maine to Texas, effectively bringing shipping to half the country to a halt. Operations at the ports have resumed, but negotiations for a full contract continue. The deadline for this round of negotiations is set for January 15, 2025. Importers and retailers are already maneuvering to protect inventories if negotiations fail in January, arranging for long-term storage or rerouted shipments, both of which can create higher prices for the consumer. A prolonged strike can result in shortages and large price spikes in all kinds of products, from food to cars to spices. 

Black pepper prices are notably higher than they were one year ago. The Vietnamese pepper harvest is down approximately 10% from last year, and Vietnamese producers are importing pepper from Brazil to meet their contracts. Vietnamese farmers are replacing pepper crops with more lucrative coffee plantings. This can negatively impact Vietnamese pepper prices, though Brazil and Indonesia have made aggressive forays into pepper planting, so pricing is still somewhat competitive. There is also, globally, less demand for pepper as consumers manage their budgets in a tight economy by cutting down on non-necessities, of which black pepper is one. While there is relatively stable—though as we said, elevated—pricing in the pepper market right now thanks to these various factors, watch for future pepper harvests to reflect the impacts of reduced plantings and climate influence. 

8/13/2024

The cost of black pepper steadily rose over the past year and is currently sitting at a 75% increase over last year’s prices. Recent market activity has seen the price of black pepper in a sideways drift, with its price fluctuating between fairly narrow parameters. It’s expected that Vietnam will have exported its entire annual pepper harvest before the end of this month, which puts additional pressure on Brazilian markets to make up the difference. Even though the global demand for pepper has remained steady, China has decreased its import of Vietnamese black pepper by up to 80%, since their own domestic harvest has been sufficient. This accounts for the sideways movement. 

The spice trade continues to be impacted by shipping difficulties through the Red Sea. Houthi rebels are still holding the area hostage and targeting commercial ships, forcing ships to redirect to longer routes. This is causing an overall rise in the cost of shipping and in the amount of shipping time, impacting time-sensitive inventories. 

7/9/2024

The volatility of the spice market is underlined by the current situation regarding the black pepper harvest. Prices have been climbing steadily since the beginning of 2024, which saw a significantly smaller harvest than other years. Thanks to both a decrease in pepper farmland due to a preference for other crops, or environmental influences like El Niño, producers in major pepper-producing countries like Vietnam and Brazil are harvesting 10-15% less pepper than in 2023 and is overall the lowest production level for black pepper and pepper products—like white or green pepper—in the last five years.
 
The last time the spice industry faced a pepper shortage of this magnitude was during 2014-2017, a time marked by low production and high demand and the attendant high costs to buyers and consumers. The industry demonstrated its adaptability as farmers began planting more pepper to take advantage of higher prices. Black pepper plants take at least two years to mature and produce fruit and so, it took several years for yields to reach a level that offset the challenging market conditions. This adaptive response is expected to be replicated in the current situation, but we can expect pepper prices to be high for at least another year, if not two.
 
The costs of other spices are also steadily increasing due to the ongoing challenges in the Red Sea. The Red Sea shipping channel has been problematic since the end of 2023 and as a route that carries approximately 12% of all the world’s trade, the impact that comes from not using it is substantial. Ships are being re-routed to go around the Cape of Good Hope, which adds roughly 10 days to a standard shipping schedule that goes from China to Europe. Shipping containers are still problematic; there are more physical containers that are ready to ship but the logistics of moving them is hampered by the previously mentioned shipping problems.

3/14/2024

Over the years, our small food business customers have asked us to provide them with more market condition information so that they can better prepare for upcoming business needs. The current product at the top of most importers' minds is black pepper from Vietnam.

In 2023, Vietnam produced 220,000 metric tonnes (MT) of black pepper, and exported 270,000MT. Vietnam has historically supplemented its exports by importing pepper from Brazil and, to a lesser extent, Cambodia. This year's Vietnam pepper crop came in at a much lower weight, measuring only 170,000MT. This may cause some ongoing price pressures in the months ahead, but we remain optimistic as we hear that China will likely export black pepper to compensate for this expected shortfall.

In the past six months, the price of Indian cumin has significantly increased. This has led more Indian farmers to increase production to maximize profitability from their land. Prices will remain tight for the next several months, but once the expected, large cumin harvest comes in, a fairly significant market correction is expected and there should be some relief in cumin prices.

India has also experienced a strong fennel seed harvest, so prices should remain favorable for the foreseeable future. Turmeric plantings are down 20-25% over last year, so prices on the higher grade are expected to remain steady.

Due to excessive rain during the wrong points of the growing season, Indian chile peppers continue to have some challenges. Higher-heat chiles are proving harder to source, and the price continues to climb due to this scarcity. We also see that persistent drought conditions in Mexico and the Southwestern US have continued to push these chile pepper prices upward.

2/8/2024

Over the last 8 months the price of cumin has hit an all-time high thanks to unseasonal rains that damaged the 2023 cumin harvest. Despite high prices, demand for cumin has remained robust and Indian farmers increased their planting acreage by 300%. The recent Indian harvest has come in strong, and prices are expected to drop in the next 60 days to below historical averages.

Vietnamese black pepper production is expected to decrease between 10-15% in comparison to 2023’s harvest and will provide the lowest export volume of the last 5 years. Prices have remained elevated while demand continues to rise. Pricing is complicated by the approach of Tet, during which much of the country shuts down for 6-10 days. There is also the concern about rising freight costs thanks to the need to reroute shipping in response to the Red Sea Crisis. Pricing is expected to remain high for the foreseeable future.

The El Niño weather phenomenon has wreaked havoc on Mexican agriculture, with more than 80% of the country being affected by lack of water. Mexican oregano and annatto prices will remain high due to these persistent drought conditions, and El Niño is expected to impact weather patterns until at least April. 

Guatemala has also been impacted by drought because of El Niño, which has caused weak harvests and high prices for Guatemalan cardamom. The first Indian cardamom harvest has begun with mixed results; some Indian cardamom-growing areas were impacted by a lack of rain during specific growing stages, while others experienced higher-than-expected harvests. Higher prices are expected to fall, though it’s important to monitor crop stability in these areas. 

1/18/2024

The 2023 US garlic harvest was completed at the end of October. Overall, production came in slightly lower than planned, which has resulted in prices going up slightly.

The sowing of the 2023-24 Indian Turmeric crop decreased by 40% compared to 2022-23; this led to prices doubling in July and August of 2023, and prices will remain elevated for the foreseeable future.

Stocks of Indonesian cloves remain tight; they are the world’s largest producer and the largest consumer of cloves, but Indonesian crops have declined nearly 40% since 2021, and they have begun importing from Africa.

Due to drier-than-predicted conditions in Guatemala, expectations for the upcoming cardamom crop have been lowered, and prices are beginning to surge.

Vietnam’s black pepper harvest starts this month, and its export volume is expected to be down 10-15%. Brazil faces a dry season linked with El Niño, which will negatively impact its upcoming black pepper crop and reduce its production in 2024.