The global vanilla market is bearish all the way

On June 5, Canadian vanilla distributor Aust & Hachmann released a global vanilla market report, saying that global vanilla prices have fallen more than half from the 2018 price high.

According to the report, the industrial vanilla market accounts for approximately 80% of the global vanilla trade. The COVID-19 new coronavirus epidemic has stimulated grocery shopping and home cooking, driving this market growth. At the same time, the epidemic has caused a huge impact on food services and public institutions.

Earlier this year, the Madagascar government set a minimum export price of vanilla of US$350 per kilogram to prevent a market crash.

The report pointed out that from the beginning of the outbreak, the Madagascar government took corresponding trade measures, so that prices did not fall in 2004. Despite this, vanilla prices have continued their downward trend, more than half of the 2018 price highs. Despite the surge in demand for industrial vanilla, global vanilla prices are still bearish, and prices are expected to plummet in the short term, and price dips may occur in the medium term.

The Madagascar government is a variable. In addition to setting a minimum export price, the government may also ban the export of herbs or restrict the export volume of approved herb exporters.

The COVID-19 new crown epidemic is another variable. The Tamatave area of Madagascar has recently experienced a surge in infections.

In 2019, Madagascar's vanilla production is close to 1500 tons, higher than the previous forecast of 1100~1200 tons. This year's harvest may exceed 2,000 tons, enough to say that the price will be much lower than the fall of 2019.

The report also updated the market situation of other herb growing areas:

Papua New Guinea: Vanilla from Papua New Guinea mainly depends on the food service sector. Aust & Hachmann estimates that Papua New Guinea's vanilla production will be about 200 tons in 2020.

Indonesia: Aust & Hachmann expects Indonesian vanilla production to reach 200 tons and above this year. Due to COVID-19, the air cargo space is limited, resulting in delays in export freight. All outbound international air cargo can only be transshipped through Jakarta.

Uganda: Farmers in the country refused to accept the decline in vanilla market prices, which led to the disconnection of Ugandan vanilla prices with prices in other producing areas.

 Comoros: Like Uganda, Comoros farmers and pre-processors hope to wait until prices rise. It is expected that in 2020, the country's output will exceed 50 tons. However, freight transportation faces logistics challenges, especially to North America.