The Hindu Business Line : Pepper market remains steady

THE lifting of ban on import of black pepper under advance licence does not seem to have had any impact on the pepper prices as the market remained steady during the week at the existing levels.

Spot prices quoted on Friday were Rs 6,350 a quintal for MG1 and Rs 5,950 for un-garbled, against Rs 6,450 and Rs 6,050 respectively on June 4.

Thus, compared to last Saturday there has been a decline of Rs 100 a quintal. But during the week prices remained by and large at Friday's level.

Futures prices were Rs 6,233 for June against Rs 6,305 last Saturday, July Rs 6,369 (Rs 6,457), August Rs 6,470 (Rs 6,765), September Rs 6,621 (Rs 6,757), October Rs 6,846 (Rs 6,952), and November Rs 6,996 (Rs 7,103).

The activity in the terminal market was low, as domestic and international demand remained poor, market sources told Business Line.

Domestic buyers are waiting in anticipation of a drop in prices. The investors are the buyers now, who are buying spot and selling futures. In one of the exchanges the price quoted was higher by Rs 4-5 a kg than in the other exchanges.

This has resulted in the investors buying from the latter exchanges and selling at the former.

Government agencies and MNCs were buying from the terminal market here, the sources said.

According to them, an estimated 12,500 tonnes of black pepper is locked up in the Central and Kerala State warehouses, while farmers are holding around 15,000 tonnes.

If the total production in the country is the estimated 70,000 tonnes, the quantity available for sale is only 42,500 tonnes whereas domestic demand is between 50,000 and 60,000 tonnes.

This indicates a gap between demand and supply in the domestic market.

Meanwhile, there is uncertainty about production in other producing countries. There have been reports that crop output in Brazil, Indonesia, and Vietnam is likely to be low this year.

The prices quoted by these countries also signal a potential decline in the global production, the sources said.

Indonesia and Brazil were offering at $1,450-1,500 a tonne while Vietnam was at $1,450 (ASTA grade) a tonne. Indian parity is at $1,550 a tonne.

Sellers are also waiting because of the impending hike in freight expected in July. They are now offering only at f.o.b. value, the sources added.

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