The Hindu Business Line : Pepper prices continue to rule hot

Bullish sentiments in recent days have been pushing up the pepper futures market and as a result the prices for all contracts at major exchanges soared again on Tuesday.

The September contract on NCDEX went up by Rs 98 a quintal to Rs 12,321 from Rs 12,223 on Monday, while on NMCE it shot up by Rs 200 to close at Rs 12,290 from Rs 12,090 a quintal.

The increase in other positions on NCDEX was from Rs 106 to Rs 185. On NMCE, it was from Rs 193 to Rs 508 a quintal.

Turnover, open interest

The total turnover on the NCDEX was up by 1,096 tonnes to close at 34,899 tonnes from 33,803 tonnes. On the NMCE, it dropped by 3,213 tonnes to 5,105 tonnes from 8,318 tonnes.

The total open interest on NCDEX stood at 27,151 tonnes compared to 27,414 tonnes on Monday, while on NMCE it was at 5,168 tonnes as against 4,855 tonnes.

The outstanding position on NCDEX for September and October was 3,218 tonnes and 17,587 tonnes, respectively, while on NMCE for October it was at 3,649 tonnes.

September position, which is nearing maturity, started declining as the players are liquidating and switching over to longer positions.

Whereas the October position is becoming explosive with 25,540 tonnes traded on Tuesday when the outstanding position was at 17,587 tonnes. This tendency is going to be a burden on the market, market observers here told Business Line.

In fact, the overall sentiments in the world pepper market are bullish but in India it is being overdone, they said.

Black in demand

Severe shortage of white pepper in the world market has pushed up its prices to as high as $3,900 a tonne (f.o.b.) and this in turn has increased the demand for black pepper for conversion.

For producing 15,000 tonnes of white pepper, 19,000 tonnes of black pepper is needed. This phenomenon might result in an additional drop of about 20 to 25 per cent in the availability of black pepper.

Given this scenario, Indonesia was offering black pepper at $2,800-$2,825 a tonne (c&f) as against the Indian parity of $2,850 a tonne (c&f). Brazil has also raised its price to $2,500 a tonne (c&f), while Vietnam was offering FAQ grade at $2,550 a tonne. Significantly the gap between the inferior and superior grades is narrowing down now.

However, in the international market there are less sellers of ASTA grade to the US and hence there are chances for India.

The ready market was closed on account of Onam.