The Hindu Business Line : Marginal fall in pepper despite thin arrivals

Similarly, futures also dropped marginally after going up by Rs 210 to Rs 534. MG1 and un-garbled were sold at Rs 8,200 and Rs 7,900 a quintal as against Rs 8,300 and Rs 8,000 on March 27.

Futures prices were Rs 8,337 as against Rs 8,453 on March 27. May Rs 8,533 (8,652), June Rs 8,939 (Rs 9,030), July Rs 9,187 (Rs 9,281), August Rs 9,305 (Rs 9,400) and September Rs 9,535 (Rs 9,659).

There was some buying support on the anticipation that the prices would move up further due to drought conditions prevailing in the growing regions.

Many new investors have entered the market thinking that the current low prices may not fall further. In fact, the market is riding on speculation and it is not a healthy sign, Mr Kishor Shamji, President, India Pepper and Spice Trade Association told Business Line.

Everybody is buying without any investment through the "dabbas" and it has become a vicious circle, he alleged.

There is good domestic demand on the anticipation that there would be a crop fall next year.

In the international market, Vietnamese production is estimated to be between 80,000 and 90,000 tonnes.

During February-March, Vietnam has shipped about 10,000-12,000 tonnes of pepper. Harvesting has picked up leading to increased arrivals. However, the sales were for short coverings.

Prices in Vietnam, Indonesia and Brazil were at $1,450-$1,475 per tonne as against the Indian parity of $1,900-$1,925 and thus totally out-priced. There is virtually no demand for Indian pepper, he pointed out.

Those who need high quality pepper are turning towards Brazil and Indonesia, which is interested in short positions in a very limited way, he said.

On the other hand, the landed cost of Vietnam pepper in India is Rs 70 a kg against the domestic price of Rs 80 a kg. Therefore, a lot of pepper will arrive in India for positive value addition and re-export.

"As the attraction is very wide, there is a risk that it may enter the domestic market,'' he said.

In April-May, pepper from Sri Lanka would arrive and it might consist of other origins also.

Arrivals were very thin in the terminal market as harvesting in most of the areas is over due to the dry spell.