The Hindu Business Line : Pepper steady on buying support

A farmer picking green pepper near Thrissur in Kerala. The low yields this year have forced the farmers to take up harvesting themselves. The production this year is estimated to be down by 30 per cent. On anticipation of drop in availability the domestic demand has increased in recent weeks. The global supply is also seen to be less in 2006. Farmers from the developing countries suffer huge losses in export earnings as a result of subsidies granted in developed countries. — K.K. Mustafah

Kochi , Dec. 18

PEPPER prices ruled steady on good domestic buying support during the week.

Spot prices of MG 1 and Un-garbled on Saturday were Rs 7,350 and Rs 7,950 a quintal respectively. The futures prices were January Rs 7,500; February Rs 7,645; March Rs 7,765; April Rs 7,866; and May Rs 8,075 a quintal.

Domestic demand is good. There is a bullish trend as the domestic players were buying futures, as the investment needed is only 10 per cent. Anticipating that the prices would move up further due to the expected decline in domestic production next year as well as in the international availability in 2006, the domestic players were buying futures, market sources told Business Line.

Meanwhile, demand from the world market is weak, as the international buyers have hurriedly covered from Brazil to meet their commitments before Christmas holidays.

Brazil has raised the price by six per cent to $1,600 tonne C&F for B1 and ASTA grade. As the demand from its traditional buyers has increased the shipment prices were also raised. Indonesia was offering at $1,650 a tonne. Vietnam, which is offering 500 GL material at $1,290 - $1,20 f.o.b., and Indonesia are hoping for good demand for nearby positions. With the Vietnam crop to hit the market by April and Indonesian in August, exporters do not seem to be favouring any discount for the second quarter of next year. Exporters in these countries are reportedly holding stock anticipating higher prices.

According to international players, the availability next year would be less than that of 2005. However, some feel that the prices may not be more than 10-15 per cent of the 2005 average price.

Indian parity at present is $1,700 - $1,750 a tonne C&F as against Indonesia's $1,650 C&F a tonne and Brazil's $1,600 C&F.