The Hindu Business Line : Dip in pepper futures prices likely to help investors

Wait and watch
Overseas buyers, who have currently adopted a wait-and-watch strategy anticipating further fall in prices, may have to cover to meet their commitments next month.
If the prices continued its downward trend, the big farmers here might delay the harvesting and hold back their produce till the prices showed an upward swing.

Kochi , Dec. 10

The continuous dip in domestic pepper prices might turn out to be favourable for the investors to buy the commodity given the projected decline next year in world production.

Domestic demand

As the domestic demand is expected to pick up in the coming weeks, the internal prices are destined to increase. On the other hand, the overseas buyers, who have currently adopted a wait-and-watch strategy anticipating further fall in the prices, may have to cover to meet their commitments next month. Probably looking at the future tight supply position, the producers in other origins have not reduced their prices.

Vietnam

Vietnam, which is to commence harvesting early next year is offering Asta grade at $2,700 a tonne (c&f) while Indonesia is stable at $2,900 a tonne (c&f). Brazil was offering at $2,425 a tonne (c&f). The Indian parity is at $2,400-2,425 a tonne (c&f) and yet there are no buyers.

If the prices continued its downward trend, the big farmers here might delay the harvesting and hold back their produce till the prices showed an upward swing. In that event, there would be a short supply situation in India pushing up the prices.

Domestic situation

The continuous fall in the futures market in India is because of the uncontrolled manipulations and heavy liquidation by bulls due to fear on the quality of the produce held in the warehouses, market observers told Business Line. In fact, price discovery and risk management mechanism in the futures market does not seem to be in existence, they said. There is no selling pressure in the spot market. Exporters are said to be covering farm grade pepper from the primary and terminal markets at around $2,500 a tonne.

Trend in exchanges

Meanwhile, Dec delivery is available at the exchanges at discounted prices. The Dec contract on NCDEX improved by Rs 26 a quintal on Saturday to close at Rs 9,398 from Rs 9,372 on Friday. However, Jan contract declined by Rs 14 a quintal to close at Rs 9,571 from Rs 9,585on Friday. The other positions moved up by Rs 4 to Rs 95 a quintal.

On NMCE, Dec increased by Rs 87 a quintal to close at Rs 8,977 on Saturday from Rs 8,890 on Friday. The other positions except Feb and May, which declined by Rs 75 a quintal respectively, increased by Rs 48 to Rs 73 a quintal on Saturday.

The total turn over on Saturday on NCDEX fell by 18,590 tonne to close at 13,594 tonne from 32,184 tonne while on NMCE it dropped by 3,095 tonne to 1,921 tonne from 5,016 tonne.

Open interest

The total open interest on NCDEX increased by 779 tonne to 24,161 tonne from 23,382 tonne. Dec position fell by 134 tonne to 6,069 tonne from 6,203 tonne while Jan increased by 556 tonne to 11,791 tonne from 11,235 tonne.

The open interest on NMCE dropped by 102 tonne to 4,907 tonne from 5,009 tonne. Dec open interest fell by 300 tonne to 2,116 tonne from 2,416 tonne on Friday.

The week witnessed a sharp fall in all futures contracts on both NCDEX and NMCE. On the former, the drop at the weekend close was from Rs 1,082 to Rs 1,193 a quintal while on NMCE, it was from Rs 997 to Rs 1,282 a quintal.

The spot prices dropped by Rs 1,000 a quintal during the week when the market closed on Saturday.

The spot prices on Saturday declined by Rs 100 a quintal to close at Rs 9,100 (un-garbled) and Rs 9,700 (MG 1).

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