The Hindu Business Line : Pepper futures market recovers

The domestic demand continues to be good especially from the grinding industry and that is met by buying directly from the primary markets in the border districts of Kerala, market observers told Business Line.

Vietnamese market was reportedly steady even after the sharp fall in the Indian prices. Brazil is said to have not much ASTA grade pepper to offer.

MG 1 ASTA was quoted at $2,875-2,975 a tonne (c&f) New York while Lampong Asta was offered at $2,975-3,000 a tonne (c&f). Brazil Asta and Vietnam Asta were quoted at $2,650 a tonne (c&f) and $2,925 a tonne (c&f), respectively New York.

March contract

After crashing on Monday, March contract on Tuesday went up by Rs 204 a quintal on NCDEX to close at Rs 11,940. The increase in other contracts was from Rs 208 to Rs 248 a quintal.

On NMCE, March contract moved up by Rs 176 a quintal to Rs 11,100. The increase in other contracts was from Re 1 to Rs 234 a quintal.

The total turnover on NCDEX dropped by 7,790 tonnes to 32,554 tonnes, while on NMCE it declined by 1,746 tonnes to 3,034 tonnes.

The total open interest on NCDEX fell by 315 tonnes to 29,356 tonnes. March position fell by 907 tonnes to 8,691 tonnes while April and May moved up by 28 tonnes and 450 tonnes, respectively.

On NMCE, open interest declined by 20 tonnes to 5,247 tonnes. The March position dropped by 89 tonnes to 3,111 tonnes.

The spot prices on Tuesday, however, ruled steady at Monday's level of Rs 11,200 (un-garbled) and Rs 11,800 (MG 1).

Mr M.L. Parekh, IPSTA President, said there was a wide disparity between NCDEX and NMCE prices though both are trading MG 1 quality pepper. NMCE is maturing on March 15 and NCDEX on March 20 and in five days difference, should there be a variation of Rs 8 a kg on the same grade of pepper to be delivered as MG 1.

The same has been highlighted in some of the broker circular to take advantage and to do the arbitrage, Mr Parekh said.

He said the NCDEX trade large volumes every day while the stocks are only 4,473 tonnes and they say that their warehouses are full.

According to him, after delivery the goods in the warehouses remain two to three days for demating. The time remaining to deliver the goods is very short and if the trucks are not getting unloaded it will create a lot of problems and the sellers will be put to severe difficulties, he said.

Besides, if the trucks are parked outside, there will be shrinkage at the rate of 300 grams per bag and because of this, the warehouse people will not unload the goods and the sellers will be asked to take back the goods. Thus, the sellers who have to tender pepper (MG 1) are in difficulties and feel harassed since the goods are not unloaded, he said.

"We understand that 25 loads have gone for unloading at the warehouse at Alapuzha, but only three loads were unloaded and because of this the sellers are incurring heavy expenses towards transportation and other extra charges, he said.

According to him, substandard goods are lying in designated warehouses of NMCE and this is the main reason for market to collapse. Even at Rs 8 to Rs 9 a kg difference, the investors are hesitant to take delivery at NMCE, he said.

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