Commodity Trading on the International Market-Production and prices of vanilla |23 November 2007

In mid October, the Seychelles Nation advertised the sale of dried vanilla pods which were cultivated locally. It was a rare advert.

The price for buying the vanilla from the Val des Pres retailer was R1200 a kilo. The vanilla pods were grown and processed at l’Union Estate on La Digue.

The Public Ledger, a weekly publication which monitors production, trading and prices of important crops around the world, said in its July 23 edition that vanilla demand was growing day by day.

Seychelles continues to export a small quantity of vanilla through tourists who buy a few pods during visits to estates and souvenir shops.

According to The Public Ledger, the export price from main producer Madagascar was $22 a kilo.
“It’s a low price,” said the president of the Miami-based Flavor Import, Marc Colin.

The export price from Madagascar is worth some 175 Seychelles rupees at the present rate of currency exchange. It compares to the R1200 a kilo at the Val des Pres shop!

A hundred years ago a kilo of vanilla produced on local plantations fetched 30 Seychelles rupees on the international market and producers could export the crop using the post office. R30 a hundred years ago could be worth over R450 at today’s value.

Madagascar has just harvested its crop for the year and has huge stock of vanilla, causing the price to remain low. The Public Ledger said the low vanilla prices were attracting demand back to the commodity but sales were likely to fall short of production for some years to come.

Although the Madagascar crop was significantly affected by cyclones, production was still considerably higher than consumption.

It is not expected that vanilla prices would go above $35 a kilo for now, so demand would keep growing. Vanilla prices surged in the early 2000s, but, after farmers sought to profit from this, prices crashed from about 2004.

Vanilla used to fetch as much as $70 a kilo until producers began to feel the squeeze from both importers and a synthetic product.

Oil prices creeping closer to $100 a barrel

Oil prices came close to breaching the $100 a barrel mark on Wednesday as the dollar remained weak, tempting traders towards commodities.

US light, sweet crude hit a record of $99.29 before slipping back to $97.29, down 74 cents on the day’s trading.
Brent crude, which hit an all-time high of $96.53 dollars, rose 50 cents to $95.99 a barrel. Tight supplies and winter demand have also contributed to oil prices climbing by about 45% since August.

US crude oil inventories fell by 1.1 million barrels last week, the US Energy Information Administration said, surprising analysts who had predicted a rise of 600,000 barrels. Analysts examining minutes from the Federal Reserve's latest rate-setting meeting, released on Tuesday, said there was a good chance that there would be another interest rate cut in December. This would be expected to weaken the dollar further as commodities and other currencies became more attractive to investors, forcing up oil prices, they said.

"Oil prices have every reason to rise," said Koo Ja-kown, crude analyst at Korea National Oil Corp (KNOC).
Leaders of producers' cartel Opec decided not to increase production at their latest meeting.

Adjusting for inflation, US light crude's record peak of $101.70 came in 1980 against a backdrop of war between Iraq and Iran.

Fuel Prices

As at 22nd November 2007

Petrol (bennzin) R 5.20 a litre cif
Diesel                   R 5.87 a litre cif