The Hindu Business Line : Pepper prices rise over 60 per cent in 2006

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Kochi Feb. 5 The year 2006 witnessed a sharp rise in the prices of black and white pepper with the prices shooting up by over $1,000 a tonne from the opening price of the year.

The International Pepper Community (IPC) composite prices of black pepper increased by $1,075 a tonne from $1,565 in January to $2,648 a tonne in December 2006 while that of white pepper by $1,416 a tonne to $3,642 ($2,226). Thus, there has been a significant increase of 69 per cent and 64 per cent respectively of black and white pepper. Compared to the average composite prices in 2005, the composite prices in 2006 increased by 39 per cent for black pepper and 29 per cent for white pepper.

The tight supply position due to drop in output in the producing countries is pointed out as the reason for the increase in prices of pepper last year.

December - inactive

However during December 2006, the market for pepper was inactive, as most buyers and sellers were not coming into the market due to Christmas and year-end holidays. The IPC Pepper Price Index decreased by 5.3 points for black and 2.1 points for white pepper during December. Average f.o.b prices of black and white pepper at source markets fell, with the composite price for black pepper coming down by four per cent and white pepper by two per cent.

Throughout 2006, black pepper prices increased significantly, particularly during second semester of the year. During first semester, prices fluctuated at narrow range, but in the second semester, prices moved up sharply to the top levels taken place in September/October 2006.

From October, the prices then went down steadily to the level of $2,321 a tonne f.o.b for Malabar Garbled 1, $2,670 for Lampung ASTA and $2,290 for Vietnamese 500g/l, according IPC sources.

The highest levels were taken place during September at the levels of $4,320 and $4,250 a tonne f.o.b for Muntok and Vietnamese white pepper and during October for Sarawak and China at the levels of $4,400 and $3,350 a tonne respectively. The lowest levels were in January for Muntok ($2,050) and Sarawak ($ 2,350) and during April for China ($2,150) and Vietnam ($1,850).

During December, the market for black pepper was quiet and prices at origins declined further, compared to the prices prevailing in November. This situation was due to the holidays apart from the buyers' reluctance to make commitments at current levels.

In India, the market was very quiet. Activity at the Commodity exchange was also limited. During the first half of December, the price of MG1 was down from $2,541 a tonne f.o.b to $2,283. During the second half of the month, the prices moved up marginally to close at $2,321. Compared to November, average spot price of un-garbled black at Kochi, decreased significantly by 9 per cent and by 7 per cent for MG1 f.o.b.

In Lampung, the market was also very quiet and prices were reported stable. The local price was IDR 20,000 a kg and F.O.B price was $2,670 a tonne.

In dollar terms, however, the local price changed because of local currency rate developments against the US dollar. On an average however, the price during December decreased by 8 per cent for black pepper at local markets and 2 per cent for F.O.B, when compared to the average price during the previous month.

In Sarawak, the price at local markets decreased from MR 7.92 a kg at the beginning of the month to MR. 7.7 during 3rd week. The price was then unchanged at this level till the month's close. The F.O.B price of Sarawak black was reported stable at $3,100 a tonne, but transaction was very limited. Compared to the prices prevailing during November, average local price at Kuching, decreased by two per cent and f.o.b price was down by three per cent.

At Ho Chin Minh City, Vietnam, the market remained inactive, with limited trading. During December, prices at HCMC were $2,290 a tonne f.o.b for 500g/l and $2,360 for 550g/l. On an average, the price of black pepper at HCMC during December 2006 was lower marginally by one per cent, compared to November.

In Sri Lanka, the average price prevailing at pepper growing areas declined significantly from SLRs 224 per kg during November to SLRs 204 during December 2006.

Compared to 2005, average prices of black pepper in December 2006 however, were higher than in December 2005 by as much as 89 per cent f.o.b, Sarawak, 85 per cent f.o.b Vietnam, 79 per cent f.o.b Lampung and 34 per cent f.o.b Malabar.

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