The Hindu Business Line : Pepper likely to stay hot

The reported sharp fall in Indian production, which is estimated to be less than 50,000 tonnes, on the one hand, and the delay in the Vietnam crop, on the other, are the reason for the bullishness.

High domestic demand anticipating short supply has pushed the prices up in the country in the last few days. Besides, overseas sources say there could be some demand from the consuming nations in the next few weeks, which may keep the prices slightly high in the international markets.

There will be, thus, a gap left for the Indian pepper to fill till mid or end of April.

The futures are already up and speculators are likely to be active in the coming days.

It is already reflected in the international prices. Indonesia, though does not seem to hold any stock, is offering March/April contracts at $1,650-1,700 a tonne c&f.

Trend in Brazil

Meanwhile, a firm Brazilian currency against the dollar has pushed up Brazil's price for March/April to $1,750-1,800 a tonne c&f. Brazil also does not have much stock. As against, the Indian parity is at $1,750-1,800 a tonne c&f. Enquiries are floating for April, May and June deliveries.

But, the exporters demand extension of export subsidy till Jun 2006 so that they could book orders before Vietnam enters the market.

On the other hand, as the white pepper price is moving up appreciably Vietnam is likely to convert its heavy pepper into white instead of going for ASTA grade black. This might also enhance the scope of Indian black pepper. White pepper would be more profitable for them because of the low cost of production. In fact, Vietnam white pepper is 10 per cent cheaper than that of Indonesia. Vietnamese production this year is estimated at somewhere between 80,000 - 85,000 tonnes. The current situation is such that in the domestic market, investors who were selling futures and buying ready are not doing so for want of goods to cover.