The Hindu Business Line : Pepper prices continue to slide on selling pressure

PEPPER prices continued its downward trend during the week on selling pressure of futures of nearby delivery coupled with weak trading in spot and slow harvesting.

Spot prices of MG1 and Ungarbled on Saturday were Rs 7,050 and Rs 6,650 a quintal respectively as against Rs 7,200 and Rs 6,800 on December 24.

Futures also witnessed a decline. January delivery was at Rs 7,097 as against Rs 7,163 on December 24. February Rs 7,272 (Rs 7,340); March Rs 7,386 (Rs 7,455); April Rs 7,482 (Rs 7,553); and May Rs 7,631 (Rs 7,702) a quintal.

With less than 15-20 days left of January delivery to mature, outstanding positions of two major exchanges for the month (January) stood at 1,343 tonnes and 6,654 tonnes. Now, they have to square up and switch over to next positions, market sources told Business Line.

Many having stocks held for the past nine months also had to release it and this phenomenon has also increased the availability in the market, they said. In fact, the domestic prices were pushed up by speculative activities and, hence, it is now coming down to realistic levels, they claimed.

On the other hand, the arrivals at the terminal market have been very thin. On Friday, the day of arrival, it was virtually nil. It shows that spot people are not selling, while the farmers are not harvesting. "Always domestic market is quite when futures are declining," they said.

Add to this, bull liquidations of nearby positions of January delivery are taking place. The difference between January and other positions is widening, they pointed out. During the past few days trading in the India Pepper and Spice Trade Association (IPSTA) has been at negligible levels and, hence, the prices remained unchanged, they claimed.

Meanwhile, much of the demand in north Indian markets is met by imports from Sri Lanka. According to reports emanating from the island-nation, their catch crop has started and they are selling at $1,400 a tonne i.e., at Rs 66 a kg landed price anywhere in India. North Indian markets are said to be buying this inferior grade Sri Lankan pepper of 500 GL with 15 per cent moisture content. Where as indigenous pepper bought from Kochi at Rs 66 a kg would cost Rs 72 a kg in the North Indian markets.

Meanwhile, international markets are closed for holidays and likely to re-open on January 3. There could be some movement when these markets are reopened, they said. Prices of other origins are also ruling high. Prices quoted by Indonesia are $1,650 - $1,675 (C&F) a tonne while Vietnam quoted Rs 1,600 a tonne (C&F). Indian parity is at $1,675 a tonne while Brazil ASTA at $1,550 a tonne.

A Vietnamese report quoting International Pepper Community (IPC) said that the pepper prices would continue to rise in early 2006 as a result of low output in Vietnam and India. Pepper production in Vietnam is projected to be less by 10-15 per cent in 2006 from that of 2005.