The Hindu Business Line : Pepper rules steady despite weak demand

PEPPER prices remained steady at the weekend though a declining trend was visible during the week on weak demand from both domestic and international market.

On the other hand, offering of pepper taken delivery from certain exchanges at prices much less than that of the market price has also paved the way for the current trend. The current situation, according to market sources, is likely to improve in the coming weeks.

Some of the investors from North India, who had invested in pepper, have started liquidating the stock, which is about nine months to one-year-old requiring re-processing involving additional cost, apart from weight loss. This released stock estimated at around 2,500 tonnes in January is available at a lower price, and that has also contributed to the decline in the prices.

In fact, it is a "beneficial supply to exporters who wanted pepper," Mr Mahendra L. Parekh, President, India Pepper and Spice Trade Association, told Business Line.

Meanwhile, domestic demand is by and large met by imports from Sri Lanka $1,400 a tonne, he said. The decline is despite the fact that arrival of physical pepper has been very thin. Though people have been saying there were 30,000 tonnes of carryover stock nothing is coming out to the terminal market, he pointed out.

In the international market, some upward trend was visible during the weekend with marginal increase in trading activities. Prices in Indonesia and Brazil showed a bullish trend, while Vietnam maintained stable prices for 500 GL grades at $1,240 - $1,260 tonne f.o.b. Indonesia was quoting $1,650 a tonne C&F, Brazil $1,600 a tonne C&F, while resellers were offering at $1,650 a tonne C&F. As against this the Indian parity was $1,700 a tonne C&F.

Despite the availability of 500 GL grade pepper in Vietnam at $1,230 a tonne some foreign buyers had bought 500 GL Indian pepper at $1,450 a tonne C&F during the week, export sources said. Meanwhile, some business had also taken place for MG1 at $1,631 a tonne C&F during the week.

The declining trend could be attributed mainly to the availability of pepper imported from Sri Lanka and liquidating the stocks held by certain exchanges below spot prices, trading sources pointed out. And, yet, there were no takers for it citing quality deterioration and weight loss.

The spot prices on Saturday were MG 1 Rs 6,800 and Un-garbled Rs 6,400 a quintal as against Rs 6,750 and Rs 6,350 respectively on January 14.

Futures prices on Saturday were February Rs 6,884 as against Rs 6,716 on January 14. March Rs 7,099 (Rs 6,883), April Rs 7,307 (Rs 6,990), May Rs 7,280 (Rs 7,086), June Rs 7,624 and July Rs 7,696.