Tight Cinnamon Supply Keeps Prices Firm as Vietnam Shipments Lag

Cinnamon prices are grinding higher in India as weather-hit crops in Vietnam, Sri Lanka and Indonesia squeeze global supply. With Vietnamese new-crop shipments to India unlikely before late June, wholesale values are expected to rise by another EUR 0.09–0.15 per kg over the next month, keeping buyers on the defensive.

Cinnamon has shifted from a quiet, well-supplied market to a structurally tighter one in recent weeks. Indian wholesale prices in Delhi have climbed steadily since a strong February rally, while FOB offers from Vietnam are being marked up ahead of a supply gap. Heavy rains in Sri Lanka and Indonesia and earlier flood damage in Vietnam have reduced available bark, disrupted stripping cycles and thinned port and pipeline stocks just as demand from spice processors, pharma and tobacco returns to normal. Until fresh Vietnamese shipments arrive, sellers retain clear pricing power and European buyers dependent on Indian re-exports should prepare for higher landed costs.

Prices

Delhi wholesale cinnamon prices rose by about EUR 0.05 per kg in the latest week to roughly EUR 2.58–2.60 per kg, extending gains after a sharp February move of EUR 0.15–0.20 that pushed prices into the EUR 2.38–2.43 range. Since then, the market has continued to firm in small, orderly steps rather than spikes, reflecting persistent buying against thin nearby supply.

Recent export offers (FOB, converted to EUR) show a relatively flat but firm structure: organic Indian cassia sticks around EUR 7.25/kg, organic cassia powder near EUR 4.90/kg, and Ceylon cinnamon sticks and powder about EUR 7.65/kg and EUR 7.13/kg respectively in New Delhi. Vietnamese cassia splits and broken grades are indicated near EUR 2.68/kg and EUR 2.20/kg in Hanoi, with cigarette grades roughly EUR 5.05/kg. These levels, while little changed over the last fortnight, sit on top of earlier increases and are under upward pressure as Indian wholesale prices climb.

Supply & Demand

India sources most of its cinnamon from Vietnam, with smaller flows from Sri Lanka and Indonesia. Vietnam’s cinnamon trees suffered bark damage in severe flooding last October, cutting output and forcing exporters to raise offer levels successively. This structural shortfall is now being compounded by ongoing heavy rains and erratic weather across northern Vietnam in May, which sustain logistical risks and reinforce expectations of tighter near-term export availability.

Sri Lanka and Indonesia have also faced unseasonal heavy rains that damaged standing trees and disrupted the bark-stripping cycle that underpins cinnamon production. Current Southwest monsoon conditions over Sri Lanka are bringing above-normal rainfall to key western and central districts, adding further uncertainty to labour and field operations in the short term. At the same time, early-season dryness and heat in parts of Indonesia linked to a developing El Niño pattern raise concerns that subsequent stress could cap yields later this year.

Within India, unseasonal rains in Kerala and Tamil Nadu have reduced local cinnamon availability, tightening domestic balances further. Port stocks are low, and trader inventories are described as thinner than usual, so each incremental pickup in wholesale demand from spice processors, pharmaceutical users, tobacco manufacturers and chyawanprash producers is transmitting rapidly into higher prices. Earlier in the season, soft farm‑gate prices allowed buyers to source directly from producing mandis; with that channel now constrained, the market has become more dependent on scarce pipeline stocks.

Fundamentals & Market Structure

Vietnamese new-crop arrivals into Indian ports are still several weeks away, with most volumes expected only from late June into July. Anticipation of this gap has prompted Vietnamese exporters to lift offers pre‑emptively, while Indian importers and stockists step up coverage to bridge the period of tightness. The combination of low pipeline stocks and scattered weather disruptions across key producing countries is turning the usual spot/forward structure more supportive.

On the demand side, there is no evidence of significant rationing yet. Buyers across stockists and wholesale traders have been willing to accept each incremental price step, motivated by below‑normal inventory positions and concern about replacement costs. The price ladder is therefore moving higher in measured, staircase‑like moves rather than disorderly spikes—typical of a firm but functional market where end‑user demand remains intact.

Broader spice markets show similar patterns, with pepper and other tropical spices also affected by weather‑related production losses in South and Southeast Asia. This cross‑commodity tightening may limit substitution options for industrial buyers, indirectly supporting cinnamon consumption even as prices rise.

Weather Outlook (Key Origins)

• Vietnam: Meteorological agencies report persistent showers and thunderstorms across much of the country through late May, alongside warnings of extreme rainfall events and flash‑flood risks in the north. At the same time, authorities highlight an elevated probability of El Niño from mid‑2026, pointing to greater weather volatility around the upcoming season. Near-term, field work and logistics remain exposed to localized heavy downpours.
• Sri Lanka: The southwest monsoon has set in, bringing heavy rainfall to western and central regions, with repeated alerts for high daily totals and landslide risk. Cinnamon operations in affected districts may see intermittent disruptions to harvesting, drying and transport, although this falls within the typical seasonal pattern.
• Indonesia: Forecasts indicate a transition toward a drier‑than‑normal pattern in many areas as El Niño strengthens into the second half of 2026. For cinnamon, this raises the prospect that current rain‑related disruptions give way to moisture stress later in the year, potentially capping the recovery in yields.

Price Outlook (2–4 Weeks)

The short‑term outlook for cinnamon remains firm. With Vietnamese new‑crop shipments to India unlikely before late June, wholesale prices are expected to climb by a further EUR 0.09–0.15 per kg over the next month. Traders with low inventories have strong incentives to rebuild coverage, and sellers are likely to defend higher offers as long as port stocks remain tight.

European processors that depend on Indian re‑exports should budget for higher landed costs through at least July, with only limited scope for relief before August. Any weather‑related delay to Vietnamese harvest progress or freight disruption could extend the period of tightness. Conversely, a smooth arrival of new‑crop cargoes from late June would gradually ease pressures, but current information still points to a managed, not abrupt, softening.

Trading Outlook & Recommendations

• Industrial buyers (food, pharma, tobacco): Consider advancing purchase programmes for Q3 needs, especially for Vietnamese cassia and Ceylon grades, to lock in supply ahead of further EUR 0.09–0.15/kg upside. Prioritise coverage for high‑spec and organic material where alternatives are limited.
• Importers and stockists in India: Maintain a cautiously long bias into late June while monitoring the pace of Vietnamese shipment confirmations. Avoid aggressive destocking until clear evidence of larger arrivals and stabilising wholesale values emerges.
• European processors: Hedge currency exposure and evaluate partial forward coverage on key grades via Indian and Vietnamese origins. Where possible, diversify specifications (e.g., blend of sticks and broken) to mitigate the impact of tightness in premium segments.
• Producers in Vietnam, Sri Lanka, Indonesia: Use current firmness to secure forward sales selectively but retain some exposure to potential further upside if new weather disruptions occur during harvest.

3‑Day Directional Outlook (EUR‑Based)

• India – New Delhi FOB (cassia & Ceylon grades): Slightly firmer bias; offers expected to edge higher in small steps in line with domestic wholesale gains.
• Vietnam – Hanoi FOB (cassia grades): Steady to marginally higher; exporters likely to test the market with incremental increases ahead of confirmed new‑crop volumes.
• India Domestic Wholesale (Delhi mandis): Firm tone with upside skew as low port stocks meet steady processor demand; any demand spikes could translate quickly into further EUR‑denominated gains.