The Hindu Business Line : Pepper fall continues

Spot pepper MG 1 and ungarbed was sold at Rs 7,300 and Rs 7,000 a quintal respectively on Tuesday as against Rs 7,400 and Rs 7,100 a quintal last Saturday.

Futures prices were also down. June delivery was Rs 7,318 on Tuesday as against Rs 7,454 q quintal last Saturday. July Rs 7,647 (Rs 7,789), August Rs 7,901 Rs 8,048), September Rs 8,034 (Rs 8,203), October Rs 8,202 (Rs 8,373) and November Rs 8,289 (Rs 8,430).

As the demand from Tamil Nadu has dropped, arrivals from Kerala's Idukki district in the terminal market have gone up to 10-15 tonnes daily. However, arrivals from the Wayanad district, another major growing area, stood at 10-15 tonnes a week as much of the produce from this region is taken out to Karnataka by evading tax. Eighty per cent of the production of estimated 22,000 tonnes from here is transported to destinations in various upcountry markets.

The upcountry demand is met by such transactions, Mr Kishor Shamji, President, India Pepper and Spice Trade Association told Business Line. Even farm grade pepper is procured from the primary markets and sold in the upcountry markets by these operators. Some of the traders have shifted to Kalpetta and other places in Wayanad from here, he pointed out. "In fact, established people in the terminal market are sitting idle for want of business," he said.

The domestic consumption of pepper is estimated at 55,000 tonnes, he said.

Also what worries the traders is the increase in imports. Import of pepper for re-export during January-April this year, has gone up to 1,901.70 tonnes from 1,604.05 tonnes in the corresponding period last year. Imports by the oleoresin industry have also almost doubled during this period to 1,856.40 tonnes from 967.64 tonnes in January-April 2003. Exports from the country during January-April this year has dropped to 4,532 tonnes from 9,700 tonnes in the same period in 2002 and 4,578 tonnes in 2003, market sources said.

However, investors are active in buying spot pepper and selling it in futures at a premium price. But, the material is not going out and "that is not a good sign. Now it is being rotated here itself," they said. The practice being followed at present is taking short positions delivery and keeping it in warehouses and then selling at long positions.

At the same time, there is virtually no international demand as the buyers are waiting for Vietnam to liquidate its stock and the prices to fall.