The Hindu Business Line : Pepper futures dip on hopes of output rise

REPORTS of a rise in pepper production in the country in the coming season have started reflecting in the futures prices. The new season futures (January 2005) opened last week have shown a declining trend.

Spot prices fell by Rs 100 a quintal from that the weekend. MG 1 and un-garbled were sold on Wednesday at Rs 7,200 and Rs 6,900 a quintal as against Rs 7,300 and Rs 7,000 last weekend, respectively.

Future deliveries were August Rs 7,418 on Wednesday as against Rs 7,542, September Rs 7,632 (Rs 7,779), October Rs 7,862 (Rs 7,982), November Rs 7,914 (Rs 7,998), December Rs 7,876 (Rs 7,991) and January Rs 7,804 (Rs7,901) a quintal.

Normally, futures for new season are quoted at a premium and the downtrend seems to have compelled those who bought futures to sell in the spot market.

With the festive season set to commence in the next few weeks, domestic demand is expected to hold the prices, according to Mr Kishor Shamji, President, India Pepper and Spice Trade Association (IPSTA).

According to reports from Kodagu region, production in the area is likely to touch 30,000 tonnes. Added to this, production in Kerala is expected to be marginally higher on favourable weather conditions in the growing areas.

However, Mr Kishor felt that the figures are exaggerated and a clear picture could emerge only by mid-August. Official estimates have put the production in the coming season in the country at over 90,000 tonnes, while the trade has put it at 60,000-65,000 tonnes. "The predictions are any way keeping the buyers away," he said.

Besides, there is apprehension of increased imports from Sri Lanka where harvesting has reached its full swing. Sri Lanka has already brought down its prices to $1,500 level and it could be lowered further. Even at $1,500 level price of imported pepper c.i.f Kochi would come to Rs 69.50 to Rs 70 a kg, which "is our current price level".

out.

In the international market, the prices are declining. Indonesia has hiked its price from $1,450 a tonne to $1,500-1,525 on the appreciation of its currency. Brazil is offering at $1,350, while Vietnam at $1,350 a tonne.

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