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G K Nair

Fluctuations expected to slow down

Kochi , Sept. 24

Pepper prices, which have witnessed wild fluctuations during the week, are likely to rule steady in the coming days given the tight world supply position, which has kept the prices at higher levels at all origins except Brazil. The fluctuations in the futures market without much change in the fundamentals are expected to slow down. Possible liquidation of part of its pepper stock by the Kerala State procurement agency, Marketed, next week together with potential release of stocks by some of the stockists is likely to improve the physical availability of black pepper in the market.

Such a scenario without high volatility in the futures market might pave the way for increased shipments in the coming days. Subsidy factor might keep the Indian prices competitive, market observers told Business Line.

Competitive prices

Some Indian exporters have already offered at $3,425 a tonne (c&f) as against Indonesia's parity of $3,525 to $3,550 a tonne (c&f). Brazil, where harvesting has begun, said to have offered B Asta at $2,850 a tonne while FAQ B2 at $2,800 and B1 at $2,700 - $2,750 a tonne (f.o.b). The prices of Brazilian pepper used to be lesser by $150-$200 a tonne than that of the Indian produce because of the quality difference. Besides, a good quantity of the estimated 35,000 tonnes current crop is said to have been sold by Brazil. Therefore, demand for heavy pepper is likely to come to India as the major competitorin this segment, Indonesia, is said to have exhausted its current crop. However, depending on the demand position the prices may move up. If the futures market moved up then the investors might step in, they said.

Futures market falls

Bearish reports from overseas brokers, who are helping out the bearish operators, said to have pushed the futures market down on Saturday. All the contracts witnessed sharp fall. October contract on NCDEX fell by Rs 353 to close at Rs 14,004 from Rs 14,357 a quintal while on NMCE it dropped by Rs 295 to close at Rs 13,749 a quintal on Saturday from Rs 14,044 the previous days. The decline in other positions on NCDEX was from Rs 289 to Rs 420 while it was from Rs 125 to Rs 210 a quintal on the NMCE. The total turnover on NCDEX dropped by 8,864 tonnes to 28,202 tonnes on Saturday from 37,096 tonnes on Friday. On NMCE, it was down by 2,693 tonnes to 5,144 tonnes from 7,837 tonnes. The total open interest on NCDEX stood at 29,954 tonnes as against 30,254 tonnes. On NMCE, it was at 5,496 tonnes compared to 5,486 tonnes.

The outstanding position for October and November on NCDEX was 9,233 tonnes and 13,725 tonnes respectively. The October outstanding position on NMCE was at 2,797 tonnes.

The October turnover dropped on Saturday by 6,314 tonnes to 13,400 tonnes while November was down by 1,980 tonnes to 10,229 tonnes. On NMCE, it dropped by 1,988 tonnes to 3,410 tonnes from 5,398 tonnes on Friday. In tandem with the futures market the spot prices dropped by Rs 200 a quintal to close at Rs 12,600 (un-garbled) and Rs 13,000 (MG 1) a quintal on Saturday.

EXPORTS UP 12 PC

The total Indian exports during January - August 2006 was at 13,709 tonnes of black pepper registering an increase of 12 per cent from 11,129 tonnes during the same period last year, according to International Pepper Community (IPC).

Indian shipments in August 2006 were at around 2,250 tonnes worth Rs.19.5 crore against 1,460 tonnes valued at Rs 11.7 crore in Aug 2005. An IPC report on Saturday said that the world pepper market continued to remain firm. Material at most sources have been exhausted, it said. Markets are watching the development of the crop in Brazil. At Kochi, the market was active. Average spot prices of un-garbled black increased by 10 per cent compared to last week. Trading at the futures market was also active and futures prices increased around seven to nine per cent.

At Kuching, local prices of black increased by seven per cent and FOB eight per cent. In Lampung, activity was limited as stocks at local market were reported to be very tight. Prices have increased significantly by 12 per cent compared to last week. In Vietnam, trading was limited as material from this year's crop was sold out and prices continued to be stronger. At Daklak, the price of raw material was VND 43,000 per kg up by 10 per cent from VND 39,000 per kg last week.

The market for white pepper was firmer, but activity was limited. At Kuching, local prices increased significantly by 11 per cent and FOB by two per cent. In Bangka, the price also increased by six per cent.

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