The Hindu Business Line : Pepper recovers on strong buying support

Spot prices moved up by Rs 600 a quintal from that of last weekend close while futures showed an increase ranging from Rs 702 to Rs 855 a quintal. MG 1 was sold on Saturday at Rs 6,500 and ungarbled at Rs 6,200 a kg as against Rs 5,900 and Rs 5,600 a quintal on Nov 20.

There was good buying by exporters who had taken delivery of nearly 400 tonnes from the central warehouses. More deliveries are expected to take place in the coming days, market sources said. Added to this, the supply has been tight following delay in harvesting because of the rains and the reluctance of the growers to sell their produce at low prices. The arrivals at present is hardly 5-7 tonnes a week.

"Those committed for November and December had to cover, so the prices moved up," Mr Kishor Shamji, President, India Pepper and Spice Trade Association, told Business Line on Saturday.

Demand from overseas markets had slowed down anticipating fall in prices when the new crop enters the market. Having sold around 29,000 tonnes of pepper, Brazil is not aggressive now and was offering at $1,350 a tonne. India, which was offering at $1,325-$1,350 a tonne has raised its price to $1,450 a tonne.

There was good domestic demand as the grinding and masala units in North India would be functioning in full swing during November, December and January. Also, harvesting in Sri Lanka has also been delayed due to heavy rains. Sri Lanka has been offering at $1,300 a tonne and it is expected to be reduced to $1,200-$1,250 a tonne level once harvesting reached its full swing. Harvesting here is also expected to reach its peak by that time.

On the other hand, there are reports that the Sri Lankan production is estimated at 17,000 tonnes and much of it would land up in the Indian domestic market, at a time when the Indian production is projected at 75,000 tonnes this season. The North Indian buyers are in fact waiting for the Sri Lankan pepper to arrive.

Given this situation, even if the Kerala Government resorted to procure pepper as a market intervention measure, as announced by the State Chief Minister, Mr Oommen Chandy recently, that might not help serve the purpose, as imported cheap pepper would be available in the market by late December from Sri Lanka.

The State Government, therefore, might have to initiate steps to check excess import of pepper from the Island nation besides resorting to a reduction in its duties so as to make the indigenous produce competitive. In the absence of such measures, the procurement process might land up in losses, the IPSTA President claimed.