The Hindu Business Line : Dip in Indonesian pepper output likey to help Indian exports

THE decline in pepper production this year in Indonesia, where harvesting has just begun, might pave the way for increased demand for Indian pepper to offset the shortfall in the international market.

According to the Jakarta-based International Pepper Community (IPC) overall pepper production in Indonesia in 2004, "will be reduced by at least 35 per cent. Total production is estimated to be 53,000 tonne (28,500 tonne of black and 24,500 tonne of white) as against 86,000 tonne in 2003," the IPC said.

Production from the main sources for export viz., Lampung, South Sumatra and Bangka, is estimated to decline by 40-50 per cent.

"Low prices coupled with the high cost of production inputs have led to the neglect of farms in most areas. In some areas, the availability of more attractive alternative activities, on-farm and off-farm, as in Bangka, have aggravated the decline. The increase in old and unproductive holdings and the decline in the area under new plantings give some indication of the poor prospects for the near future."

According to the IPC, the prospects for 2005 are also not very encouraging. However, it said that while production in other countries, particularly Vietnam and Brazil, might to some extent offset the fall in production of black pepper, the shortfall in white pepper supply might affect the market more seriously. It is likely that decorticated black pepper will obtain a larger market share as the price of white pepper increases significantly relative to the price of black, it said.

Pepper trading sources told Business Line on Saturday: "There would be demand for Indian pepper to fill the gap till harvesting begins in Brazil in October/November if we are able to hold to our price of $1650 a tonne." They said that Indian production, according to traders' estimates, would be 55,000 tonnes as against the IPC's projection of

62,000 tonne.

The production in Malaysia, they claimed, this year is around 25,000 tonnes while that of Brazil would be about 45,000 tonnes.

Malaysia is, of late, not aggressive in selling and it gives the impression that it has already sold out its produce.

Add to this, Japan, which is a regular buyer from Malaysia, has turned towards India.

On the other hand, Vietnam, the only producer believed to be holding stock of pepper, had already sold out an estimated 50,000 tonnes to the multinationals in the country and around 15,000 tonnes to China.

Lack of selling pressure there gives the feeling that it does not hold huge stocks and the production this year was somewhere around 75,000 tonnes. It was offering now at $1,425-1,450 a tonne. Vietnam has also started converting good quantity of black pepper into white, they said.

Indonesia has also raised its price to $1,400 a tonne, while Sri Lanka has reduced it to $1,500 a tonne. Brazil does not seem to be enthusiastic to offer its new crop now. The international market remained firm.

The spot and futures prices have showed an upward trend during the week at the terminal market here. There was some domestic demand while exporters were buying to meet their immediate commitments.

The spot prices on Saturday moved up by Rs 200 a quintal from that of last Saturday. MG 1 and un-garbled were sold at Rs 7,400 and Rs 7,100 a quintal as against Rs 6,900 and Rs 7,200 respectively on June 19.

The future deliveries were quoted on Saturday at July Rs 7,652 as against Rs 7,479 a quintal; August Rs 7,907 (Rs 7,726), September Rs 8,080 (Rs 7,882), October Rs 8,234 (Rs 8,033), November Rs 8,234 (Rs 8,073) and December Rs 8,260 (Rs 8,099).

More Stories on : Spices & Condiments | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Allow banks to develop gold-backed products: WGC

Feasibility report sought for tea park

Palm oil futures may head up

Dip in Indonesian pepper output likey to help Indian exports

PM likely to visit AP