The Hindu Business Line : Pepper down on bearish sentiments

Pepper futures continued to witness a downward trend as a bearish sentiment gripped the market. In the international market, sellers and buyers have adopted a wait and watch attitude at current price levels. A tight supply position continues to persist, market observers told Business Line.

The August contract, which dropped to Rs 9,731 a quintal in the morning on NCDEX, went up to Rs 10,350 in the afternoon session and then closed at Rs 10,090.

On NMCE, during the course of trading, it fell to Rs 9,601 and then recovered and moved up to Rs 10,100 a quintal to close at Rs 9,825.

Other positions

The decline in other positions on NCDEX was from Rs 9 to Rs 69, while on NMCE it was from Rs 82 to Rs 291 a quintal.

The turnover on NCDEX increased by 16,353 tonnes to 68,783 tonnes from 52,430 tonnes on Wednesday. On NMCE, it went up by 1,265 tonnes to 8,352 tonnes from 7,087 tonnes. The total open interest on NCDEX stood at 22,710 tonnes against 23,070 tonnes, while on NMCE, it was at 4,135 tonnes compared to 4,630 tonnes.

The outstanding position for August, September and October on Thursday was 5,450 tonnes, 5,702 tonnes and 8,305 tonnes, respectively.

Meanwhile, an International Pepper Community (IPC) report said due to limited stocks in the market, producer prices of black pepper at Lampung increased sharply. During the last three days, prices increased to Indonesian rupiah (IDR) 17,000 from IDR 12,000 per kg.

Limited supply

Although the harvesting season has begun and demand is increasing, supply from farmers to local traders is limited, as stocks from last year's crop have been sold out and output this year is estimated to be significantly less than last year.

It is expected that only 70 per cent of last year's crop will be harvested this year. The decrease is mainly due to unfavourable weather during fruiting.

Farmers responded calmly to the increase in price, as they don't have much material to sell. Besides, other commodities such as coffee and cocoa are yielding good income. They expect the price to increase further and remain stable at remunerative levels.

This gives some encouragement for farmers to tend to their pepper farms; it is expected that some of the old and diseased vines will be replanted and some unproductive farms rehabilitated.

Spot market ruled steady. The prices of un-garbled and MG 1 on Thursday were at Rs 9,800 and Rs 10,200 a quintal, respectively.

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