Cinnamon Prices Explained

Cinnamon prices continuously remain elevated as the commodity’s demand grows faster than the global supply. This spice found a large application in the food and beverage industries due to its nutritional benefits. Additionally, cinnamon posted its record as the most-traded spice in Europe, marking its expansion in the West. Thus, this positive market note presents tailwinds in cinnamon market prices.

Why are cinnamon prices fluctuating?

1. Supply and Demand Dynamics

Higher demand leads to increased cinnamon prices, however, lower demand results in reduced prices as suppliers reduce their costs to encourage purchases and clear excess inventory.

Additionally, higher supply leads to reduced prices to encourage consumption and balance the market, lower supply leads to increased prices due to increased demand for a limited supply. Overall, the fundamental economic principle of supply and demand plays a significant role in determining the price of cinnamon.

2. Quality and Grading

Variations in quality within the cinnamon market stem from the following factors such as the type of cinnamon, how it’s harvested and processed, its aroma and flavor characteristics, geographic origin, and grading standards. Therefore, these quality differences lead to cinnamon price variations.

3. Weather Condition

Weather conditions significantly affect the price of cinnamon due to their direct impact on the plant’s cultivation and production as it is sensitive to various weather-related factors. Thus, the weather’s unpredictability and its potential to harm cinnamon crops make it a significant factor in its price fluctuations

4. Global Trade and Policies

International trade agreements, tariffs, import/export regulations, and transportation costs affect the value of cinnamon in the global market. Moreover, changes in trade agreements, tariffs, or import/export regulations impact the cost of importing or exporting cinnamon, thereby affecting its price.

Which variables impact the price of cinnamon?

• Supply and Demand Dynamics
• Quality and Grading
• Weather Condition
• Global Trade and Policies
• Market Speculation
• Economic Factors

Where does cinnamon come from?

Cinnamon is obtained by harvesting the inner bark of the trees. The bark is peeled off, dried, and rolled into sticks or ground into powder. Additionally, these trees are native to different regions and countries, primarily in Asia.

There are four main species of commercially cultivated cinnamon:

1. Ceylon Cinnamon – Often referred to as real cinnamon, it is known for its delicate, sweet flavor and a lighter, more subtle aroma.

2. Cassia Cinnamon – Or Chinese cinnamon, this darker, reddish-brown variety is commonly used for various purposes. Additionally, it has a stronger and spicier flavor.

3. Royal Cinnamon – Saigon cinnamon is a variety of cassia cinnamon known for its high oil content and strong, and spicy flavor.

4. Korintje Cinnamon – Indonesian cinnamon is known for its bold, spicy flavor, and aromatic properties.

What are the uses of cinnamon?

Cinnamon has been used for thousands of years for its culinary, medicinal, and aromatic properties, and it continues to be a popular spice worldwide. Additionally, it is a spice that is used to flavor numerous foods. Other uses of cinnamon include:

1. Health and Wellness – In traditional medicine, it’s used for its potential health benefits, including anti-inflammatory, antimicrobial, and antioxidant properties.

2. Culinary Uses – Cinnamon is a widely used spice that adds a sweet, warm, and slightly spicy flavor to many dishes such as cakes, cookies, muffins, pies, bread, and other baked goods. Moreover, it is used to flavor hot beverages like tea, coffee, and mulled wine.

3. Spice Blend – A key ingredient in various spice blends like pumpkin spice, apple pie spice, garam masala, and curry powder.

4. Aromatherapy and Fragrance – Its warm and comforting aroma makes it a popular choice for candles, potpourri, and essential oils.

5. Oral Health – Cinnamon is found in some toothpaste and mouthwash products due to its potential antibacterial properties and ability to freshen breath.

6. Decorative Uses – Its sticks are often used for decorative purposes, especially during the holiday season. Additionally, it is used in crafts like wreaths and ornaments.

What is the future price of cinnamon?

The global cinnamon market is expected to grow substantially, primarily propelled by the increasing demand for key flavoring agents in various savory foods and beverages worldwide. Its expanding applications in the cosmetics, pharmaceutical, and bakery sectors will drive market growth.

The commodity’s antibacterial properties, particularly its ability to break bacterial biofilms make cinnamon a potential replacement for antibiotics in treating infections. In connection with this, the need for cinnamon from the poultry industry increases due to the ban on synthetic antibiotic growth promotors.

Overall, the estimated price of cinnamon in 2028 is $7,620 per metric ton and a global market size of $2.20 billion at a CAGR of 7% during the forecast period of 2023-2028.