Need an explanation!!!

[Ramses II CP]

<-- Not an expert, but I've definitely seen some bonus (Whether due to combat effectiveness or other) for camels against horse cavalry. Of course 90% of MTWII battles feature the 'flank them with cavalry, charge, watch insta-rout' so the effect I saw could just be the standard mechanic of combat.

[PBI]

I've been silly enough to engage Tuareg camels with cavalry head-on a few times, and I would say it definitely seemed to me to be a combat bonus rather than a morale bonus; indeed, the cavalry fought almost to the death, but they killed very few camels and lost very heavily considering the camels' relatively low stats.

[Quintus.JC]

I think camels gets Bonus against horses because they stinks! As explained with some camel units these warriors can be useful against lighter cavalry units, as horses dislike the smell and appearance of camels. This decrease the morale as no body likes to fight against a bunch of stinkers.

[Old Geezer]

I am not sure if camel stink is much of factor in M2TW but it definitely was in good ole MTW.

[ataribaby]

Camels are definitely not a unit that you can safely engage with cavalry in melee. They'll always do well even against a General's Bodyguard. With cavalry I avoid them like the plague.

[Rhyfelwyr]

Now you mention the combat bonus, that does seem to ring a bell. I remember attacking Jedda, or maybe Arguin or somewhere like that. Anyway it was a village and had a few Camels along with Nubian and Sudanese infantry units. I remember my Desert Cavalry and even my General's Bodyguard doing unbelievably bad against the camels, at one point I thought it was going to end in a humiliating defeat. My cavalry didn't rout though, so it does seem like camels get a better attack than morale bonus.

Now I know this they could be very useful against the horde factions...

EDIT: Still not sure it justifies an upkeep of 300 for Tuareg Camel Spearmen though.

[Doug-Thompson]

Cyrus the Great of Persia won battles against enemy with good cavalry by using camels. They smell bad, they're ugly, bad-tempered, bigger than horses and mean. And yes, they do scare horses, especially those unfamiliar with them.

They're kind of like elephants. They're not so effective once you're used to them and know how to counter them.

Missile cavalry can keep far enough away to avoid the fear penalty. Camels die quickly to missiles.