The Hindu Business Line : Global pepper output may fall; market turns hot

WORLD pepper production is projected to decrease by 33,200 tonnes next year and it seems to reflect in domestic prices, which have shot up by Rs 600 a quintal in less than a fortnight.

The production in the International Pepper Community (IPC) countries next year is estimated at 2.11 lakh tonnes as against 2.45 lakh tonnes in 2005, less 33,200 tonnes. However, in non-IPC countries it will be 17,400 tonnes compared with 17,270 tonnes this year, a marginal increase of 130 tonnes, according to IPC sources.

As reported earlier, production in India will be lower by 25,000 tonnes. As against 70,000 tonnes in 2005, production next year is estimated at 45,000 tonnes, the sources said.

Brazilian production is expected to remain at this year's level of 33,000 tonnes while Vietnam is estimated to be lower by 3,000 tonnes at 87,000 tonnes next year.

There has been international demand for Indian pepper during the past few weeks but the increase in domestic prices during the week has weakened it. "It seems that the international players are trying to adjust to the realities," Mr Kishor Shamji, President, India Pepper and Spice Trade Association (IPSTA), told Business Line. Anticipating a late pepper crop in Vietnam, following reports that its coffee crop would be delayed, the Lampong market was "a touch firmer". The latest f.o.b prices quoted for ASTA grade were: Indonesia $1,450 a tonne, Brazil $1,275-1,300 and Vietnam $1,400 a tonne. Indian parity is $1,575 (f.o.b) a tonne.

In the domestic market, there is high demand while availability has already shrunk. Sri Lankan exporters who had quoted $1,275- 1,350 a tonne earlier are now defaulting, resulting in a drop in arrivals. They have also raised the price to $1,450-1,475 a tonne.

Meanwhile, the selling pressure in Karnataka has almost ceased. While the Kodagu region has not much to offer, some quantity is available in Sakleshpur.

In Kerala, the major producer, some growers are holding back nearly 25-30 per cent of their produce, as the prices have not met their expectations.

The situation has reached a stage where "if somebody wanted to buy 500 tonnes of pepper it is not available", market sources said.

Meanwhile, some traders in Delhi, Nagpur, Mumbai and Patna are said to have complained that the Karnataka pepper consignments they received were mixed with Sri Lankan produce.

They reportedly said the berries were not as bold as those of Karnataka.

The sources said speculators from Rajasthan and Delhi who had been bullish for the past two weeks were investing in the commodity, based on some astrological predictions that the price of "black commodities would go up in the coming weeks", they said.

Prices shoot up

In less than a fortnight, spot prices shot up by Rs 600 a quintal, while the futures soared by Rs 692 to Rs 744 a quintal on Thursday.

The spot prices of MG 1 and un-garbled on Thursday were Rs 7,250 and Rs 6,850 as against Rs 6,650 and Rs 6,250 a quintal respectively on November 19.

The prices were pushed up by speculators on rumours that the Kerala State procurement agency, Marketfed, which had procured 4,800 tonnes of black pepper might not sell.

The other factors, market sources said, were the absence of sellers for spot and the likely delay in harvesting by about six weeks due to the protracted monsoon this year.

Futures prices on Thursday were: December delivery Rs 7,352 as against Rs 6,660 on November 19. January Rs 7,567 (Rs 6,855), February Rs 7,753 (Rs 7,023), March Rs 7,799 (Rs 7,065), April Rs 7,901 (Rs 7,157) and May Rs 8,057 a quintal.

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