The Hindu Business Line : Speculative buying may push pepper higher

Tight supply position in the world pepper market and consequent persistent rise in prices in all the producing countries seem to have enthused the investors to enter the pepper futures market.

National co-operatives are buying spot and selling futures. Rubber traders and growers have also entered the market. Speculation is that the prices may touch Rs 150 a kg in the coming days.

Speculative buying in futures has raised the prices to close beyond the ceiling i.e., highest permissible rate of the day.

As a result, the rise in the prices for all the contracts on NCDEX and NMCE was from Rs 550 to Rs 724, a quintal at Saturday's close.

August contract on NCDEX shot up by Rs 635 to close at Rs 10,348 a quintal from Rs 9,713 the previous day, while on NMCE it increased by Rs 573 to close at Rs 10,315 from Rs 9,742.

The increase in other positions on NCDEX was from Rs 668 to Rs 710 a quintal, while on NMCE it was from Rs 550 to Rs 724 a quintal.

The total turnover on NCDEX on Saturday was went up by 11,220 tonnes to 32,418 tonnes, while on NMCE it increased by 477 tonnes to 5,258 tonnes from 4,781 tonnes.

Compared with last Saturday, the rise in prices for all contracts on NCDEX was from Rs 1,475 to Rs 1,524 a quintal, while on NMCE it was from Rs 1,278 to Rs 1,625 a quintal.

Open interest

The total open interest on NCDEX was 19,593 tonnes as against 17,871 tonne. On NMCE, it was 4,326 tonnes compared to 4,483 tonnes.

The outstanding position on NCDEX for August, September and October was 6,721 tonnes, 4,613 tonnes and 5,323 tonnes respectively.

Global trend

Indonesia has raised its prices to $2,380 a tonne (C&F) while Indian parity stood at $2,400 a tonne (C&F). Brazil was offering at $1,900 a tonne (f.o.b). Brazil price used to be $100 below the Indian parity. Vietnam is not in the market though it was offering 500 GL at $1,900 a tonne. Overall, there was no selling pressure.

However, the situation is risky as nobody so far reported to have traded at this price, market observers told Business Line. There has been no domestic demand while the stocks are in the "iron hands" and they do not want to sell now hoping that the prices would cross Rs 150 a kg.

Spot prices

In tandem with the rise in futures and the persistent tight supply position in the world market, spot prices shot up by Rs 300 a quintal to close at Rs 9,600 (un-garbled) and Rs 10,000 (MG 1) at Saturday's close.

Spot prices during the week shot up by Rs 1,550 a quintal from Rs 8,050 (un-garbled) and Rs 8,450 (MG 1) from last weekend close.

IPC report

According to an International Pepper Community report on Saturday, the black pepper market continued to rule firmer. At Kochi, compared to last week, spot and f.o.b. prices increased sharply by around 15-17 per cent.

Trading at the futures market was very active and futures prices increased by around 13-16 per cent.

At Kuching, local prices were stable during the week, but compared to last week, there has been an increase by three per cent and f.o.b. prices increased by four per cent.

In Lampung, initial crops have started to arrive, but peak crop is expected to come in August. Activity, however, was still limited and prices improved by three per cent. In Vietnam, the market remains firm.

At Daklak, prices of raw material increased from VND 23,500 to VND 25,000 per kg at the week's close.

Similar Trend

White Pepper market reflected a similar trend. In Bangka, the local price continued to increase from IDR 25,250 per kg to IDR 26,250 at the week's close.

In dollar terms the prices registered an increase by eight per cent. In Sarawak, local prices increased by three per cent and FOB by four per cent. In Hainan, prices improved by two per cent.

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