The Hindu Business Line : Competitive price gives edge to Indian pepper

Sharp fall in pepper futures and spot markets during the week has made the Indian pepper much more competitive in the world market, where the supply position continues to remain tight, creating the ground for more orders to come to the country.

Brazil has already raised its price for B Asta from $2,750 to $2,900 a tonne (f.o.b) while Vietnam, which does not have Asta grade to sell, was offering only FAQ 500 GL. Indonesia continues to rule higher.

Given this situation, availability of quality pepper (MG 1) at competitive price is keeping the Indian produce at an advantageous position.

However, everything will depend on as to how the international market reacts to this current situation, market observers told Business Line. Overseas buyers are asking for November/December, but the exporters are reluctant to sell future positions because of the higher prices for these positions in the domestic market. Advancing of the maturity date on NCDEX for October delivery from October 20 to October 17 and the advertisement by Marketfed, the Kerala Government procurement agency, that it would auction 300 tonnes of black pepper on Monday, has contributed to the fall in the prices both in futures and spot on Saturday. There was a selling pressure because of these developments.

Alleged manipulations and aggressive bearish activities have kept the futures market highly volatile during the week.

On NCDEX October contract fell by Rs 911 a quintal on Saturday to close at Rs 11,840 a quintal from Rs 12,751 on Friday and Rs 13,708 on September 30. Similarly on NMCE it dropped by Rs 959 a quintal to close at Rs 11,380 from Rs 12,339 and Rs 13,369 at last weekend close. The fall in other positions on NCDEX on Saturday was from Rs 805 to Rs 882 a quintal while on NMCE it was from Rs 700 to Rs 1,013 a quintal.

Open Interest

Total turnover on NCDEX on Saturday was up by 800 tonnes to close at 34,110 tonnes from 33,310 tonnes on Friday. On NMCE it has increased by 1,115 tonnes to close at 5,638 tonnes from 4,523 tonnes. The total open interest on NMCE fell by 1,446 tonnes to 26,448 tonnes from 27,894 tonnes while on NMCE it marginally declined by 87 tonnes to 5,585 tonnes from 5,672 tonnes.

The outstanding position for October, November and December on NCDEX on Saturday was 4,864 tonnes, 11,934 tonnes and 6,202 tonnes respectively while on NMCE December outstanding position was at 3,711 tonnes. In tandem with the decline in futures and on selling pressure, spot prices fell by Rs 400 a quintal to close at Rs 11,600 (un-garbled) and Rs 12,000 (MG 1) on Saturday.

Black Pepper

According to International Pepper Community (IPC) on Saturday, the black pepper market has generally declined with the exception of Indonesia. In India, trading was slower. Price of un-garbled black was down from Rs 124 a kg at the end of last week to Rs 116 a kg at the week's close. On an average, prices at Kochi eased marginally by 1 per cent compared to last week. In Sarawak, local prices declined from Malaysian ringgit (MYR) 9 a kg at the end of last week to MYR 8.76 this week. On an average, the price eased by 2 per cent and 6 per cent for f.o.b. In Vietnam, prices also declined by 2 per cent. At Daklak, average price of raw material was VND 40,400 a kg. In Lampung, it was reported that local prices recovered to IDR 24,500 a kg, but trading was limited.

The price of Muntok white pepper at the local market rose to the level of IDR 34,500 a kg after last week's correction to IDR 32,500. At Kuching, local prices eased by 3 per cent, but f.o.b increased by 2 per cent.