The Hindu Business Line : Downtrend in pepper may end soon

A favourable climate prevails in the pepper futures market with both the domestic and international prices ruling low for investors to invest in January/February contracts.

The current downward trend is likely to end in the coming weeks, as the domestic demand has started picking up following the onset of winter in North India. Besides, the continuous North-east monsoon in Kerala is expected to delay the harvesting of pepper by 4-5 weeks.

No selling pressure

On the other hand, there was no selling pressure in the spot market, and as a result, exporters are eyeing futures market for covering up. When the exporters start buying from exchanges the futures market prices are also likely to move up.

Meanwhile, north Indian markets, especially Gwalior, where pepper was being sold at prices far below the terminal market price, have started buying from Kodagu region. It shows that the dealers have exhausted their stocks.

In the international market, also, fresh arrivals from Vietnam's new crop are likely to begin in March. Therefore, the tight supply situation is likely to continue in January/February.

Indian parity is at $2,700-2,775 a tonne (c&f), while Indonesia continued to stick to its earlier levels at $2,975-3,035 a tonne (C&F). Brazil was offering B Asta at $2,500-2,650 a tonne (f.o.b.).

On the exchanges as the November contract will be maturing on Monday, those holding long positions have been liquidating and shifting to January. Besides, bulls are liquidating as they have no confidence in the quality of the product held in the warehouses, market observers told Business Line. This trend has pulled down the futures prices. All the contracts on NCDEX dropped sharply on Saturday.

November contract on NCDEX fell by Rs 258 to close at Rs 10,416 a quintal from Rs 10,674 on Friday. The decline in other positions was by Rs 67-Rs 184.

On NMCE, December contract dropped by Rs 108 a quintal to close at Rs 10,252 from Rs 10,360 on Friday. January and March contracts fell by Rs 61 and Rs 95 respectively, while February moved up by Rs 87 a quintal on this exchange. However, April and May remained unchanged at Rs 11,290 and Rs 11,584 a quintal respectively.

The total turnover on NCDEX fell by 4,371 tonnes to 6,203 tonnes from 10,574 tonnes on Friday, while on NMCE it dropped by 1,249 tonnes to 1,394 tonnes.

The total open interest on NCDEX was down by 24 tonnes to 21,820 tonnes from 21,844 tonnes. On NMCE, it dropped by 130 tonnes to 4,979 tonnes from 5,109 tonnes.

The open interest for November on NCDEX fell by 406 tonnes to 1,909 tonnes from 2,315 tonnes on Friday, while December moved up by 162 tonnes to 13,416 tonnes. The December open interest on NMCE fell by 130 tonnes to 3,976 tonnes.

Spot prices also in tandem with the futures market trend dropped by Rs 200 a quintal to close at Rs 10,100 (un-garbled) and Rs 10,700 (MG 1) on Saturday.

IPC REPORT

The black market was quiet with limited trading activity, according to the International Pepper Community (IPC) report on Saturday. Prices at most origins were reported to have come down further. Buyers were still not interested to bid at current levels, expecting to get more competitive prices in early 2007. In Vietnam, the market was inactive and local price at HCMC eased by four per cent to VND 36,000 a kg from VND 37,500 last week. There is no information about f.o.b. prices in Vietnam.

In Lampung, trading activity was very limited as stocks at farm levels are very tight and prices at local markets were reported to have eased by three per cent. At Kochi, the market has also come down with limited activity. Average price of Malabar black eased marginally, but was relatively stable compared to the other origins. The price at Kochi showed an improvement at the week's close. In Kuching and Sri Lanka, local price eased marginally by one per cent, but f.o.b. prices at Kuching were reported stable.

The White Pepper market was also quiet. Local prices in Bangka eased by six per cent. At Kuching, local prices eased by three per cent, while in Hainan, prices were reported stable.

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