The Hindu Business Line : Pepper drops sharply on weak demand

Spot prices have dropped by Rs 500 a quintal during the last fortnight. The prices of MG 1 and ungarbled on Thursday were Rs 7,700 and Rs 7,400 a quintal as against Rs 8,200 and Rs 7,900 respectively last month-end.

The futures prices have also witnessed significant fall during the period. April delivery was Rs 7,653 a quintal (less than the spot price) on April 15 as against Rs 8,337. May Rs 8,011(Rs 8,533), June Rs 8,370 (Rs 8,939), July Rs 8,701 (Rs 9,187), August Rs 8,812 (Rs 9,035) and September Rs 8,975 (Rs 9,535).

The arrivals at the terminal market dropped to 3-4 tonnes a day and that too was irregular, Mr Kishor Shamji, President, India Pepper and Spice Trade Association (IPSTA) told Business Line. As the future deliveries were quoted at higher prices, the farmers, anticipating that the prices would go up in the coming months, were holding back their produce.

The presence of franchises of members of commodity exchanges in every nook and corner of the State trying to increase the volume was pushing up the prices without any basis, he said.

Pepper production in the country is estimated at around 60,000 tonnes and the domestic market absorbs about 50,000 tonnes. If the internal prices were allowed to rule much above the international prices, it would undoubtedly result in import of cheap pepper in a big way through manipulations, he pointed out.

According to him, as a result of the speculation by the bulls and long operators prices of future deliveries of April had dropped below spot prices. Short operators were also now ready to switch over to long deliveries. He said there was good domestic demand. But it was met by direct supplies from Karnataka's Kodagu region and Kerala's Wayanad district.

The domestic market is expected to be flooded with imported pepper because of the wide price difference. In the international market Vietnam was offering at $1,250-1,350 a tonne. Brazil and Indonesia were offering at $1,400-1,450 a tonne. The Indian parity continued remain at higher levels at $1,800 a tonne. As a result, demand from overseas was virtually nil, he said.