Clove Prices Spike as Weather Hit Cuts Madagascar & Indonesia Supply

Indian and global clove prices are trading sharply higher as poor weather in key origins tightens export availability, with Indian values closely tracking the international rally. With Madagascar and Indonesia both facing weather-related crop stress and import costs inflated by currency moves, buyers in India see little near‑term relief. Elevated overseas prices and uncertain new‑crop arrivals mean domestic clove prices are likely to stay firm to bullish into the short term. Indian clove prices have surged to the equivalent of about EUR 9.70–10.40/kg on an FOB basis, reflecting a swift pass‑through from international offers near USD 10.27–11.00/kg. This move is being driven not by a demand shock but by constrained supply from Madagascar and Indonesia, the two anchor origins for the global trade. At the same time, Indian production covers barely a quarter of domestic consumption, increasing reliance on high‑priced imports and amplifying the impact of adverse weather and currency on landed costs.

Prices

Indian clove prices have risen sharply in recent weeks, with benchmarks reported around USD 10.27–11.00/kg, now translating into firm FOB India levels near EUR 9.7–10.4/kg after FX adjustment and import costs. Domestic organic offers from New Delhi show a steady upward trend through August, with whole cloves moving from roughly EUR 9.50/kg at the start of the month to about EUR 9.57/kg by 27 August, and ground cloves from about EUR 9.65 to 9.72/kg over the same period.

The modest but consistent week‑on‑week increases in Indian EUR prices understate the true pressure visible in rupee terms and import parity values. As long as international offers from Madagascar and Indonesia remain at or above the USD 10/kg mark and freight plus FX add further costs, Indian importers are likely to defend current resale levels and resist significant discounts.

Supply & Demand

The current price spike is primarily supply‑driven. Adverse weather has undermined crop prospects in both Madagascar and Indonesia, two of the world’s largest clove exporters. Recent analyses of the South‑East Asian clove sector highlight that poor weather over recent seasons has already reduced clove yields in Indonesia and Madagascar, structurally tightening regional supply. This season’s renewed weather issues are amplifying that effect.

On the demand side, Indonesia’s huge kretek tobacco industry continues to absorb the majority of domestic clove output, limiting exportable surplus even when crops are normal. Import‑dependent markets such as India therefore face a double squeeze: lower export availability from producing origins and strong internal competition for cloves in Indonesia itself. With India’s own production meeting only a fraction of domestic needs, the country must compete aggressively on price to secure shipments, reinforcing the upside pressure on local markets.

Weather & Logistics

In Indonesia, meteorological services forecast a strong, dry El Niño‑dominated dry season, with July–September marked as the peak of the 2026 drought period across large parts of the archipelago, including Maluku where cloves are a key crop. Prolonged dryness can stress clove trees, affect flowering and bud set, and potentially reduce harvest volumes or quality, especially for the 2026–27 marketing cycle.

For Madagascar, medium‑range forecasts through mid‑September indicate no immediate cyclone threat and mostly seasonal conditions, but recent years have shown how quickly storms can disrupt clove‑growing regions and export infrastructure. Even in the absence of new cyclones, lingering impacts from earlier adverse weather and uncertain yield assessments keep exporters cautious in forward selling. Logistically, there are no major port disruptions currently reported in key clove corridors, but tight origin stocks mean that shipment delays and partial loadings remain a risk for buyers relying on spot purchases.

Fundamentals & Market Drivers

• Tight origin stocks: Madagascar and Indonesia both report reduced effective availability due to earlier weather damage and strong local demand, leaving a smaller tradable surplus and reinforcing firm offer prices.
• Currency & import costs: Higher international prices, combined with currency‑related import costs and freight, are inflating landed values into India and other importing hubs, directly supporting domestic wholesale prices.
• Speculative & precautionary buying: With uncertainty around the next crops and memories of past cyclones and droughts, traders and processors are inclined to secure coverage earlier, adding a risk premium to nearby positions.
• Stable end‑user demand: Food, beverage and pharma demand remains relatively inelastic at current price levels, meaning that consumption has not yet adjusted enough to offset supply‑side tightness.

Outlook & Trading Recommendations

In the very short term (next 2–4 weeks), the clove market is expected to stay firm to slightly upward, as no immediate improvement in origin supply or weather is visible and import costs remain elevated. The main downside risk would come from a sudden easing in Madagascar or Indonesian supply signals, but current information does not suggest a rapid loosening of the balance.

• For importers/processors: Consider securing at least 1–2 months of physical coverage at current levels, staggering purchases to avoid peak spikes but avoiding excessive short exposure given ongoing weather risks.
• For end‑users (F&B, pharma): Lock in medium‑term supply contracts where possible, prioritising reliable quality and origin diversification over marginal price savings.
• For producers/exporters: Current prices justify disciplined selling; avoid over‑committing forward until better clarity on 2026–27 crop sizes and weather emerges, but use the firm market to secure improved margins.

3‑day directional price view (EUR, indicative): For key Indian FOB indications, whole and ground organic cloves are likely to hold in a tight, firm band around EUR 9.5–9.8/kg over the next three trading days, with an upside bias if any fresh weather‑related concerns emerge from Madagascar or Indonesia.