The Hindu Business Line : Pepper prices unlikely to drop below $2,500 a tonne

Thin arrivals
The crop in Brazil is said to be less in 2007.
The situation in Indonesia is also reportedly not very encouraging.
The thin arrivals at markets here speak of the low crop in India.

Kochi March 26 The current price trend in Vietnam indicates the tight supply position and as such the farmers there do not seem to part with their produce anticipating further increase in prices.

There seems to be a good demand from China after its New Year celebrations and substantial quantity of pepper was moving out via Cambodia. In addition, more new destinations are also said to be coming up for pepper.

Crop Arrivals

On the other hand, the crop in Brazil is also said to be less in 2007. The situation in Indonesia is also reportedly not very encouraging. The thin arrivals at the terminal markets here speak of the low crop in India. Thus, the current tight supply position is expected to stay.

Vietnam was offering Asta grade at $2,800 a tonne (f.o.b.) while Brazil is said to have quoted $2,700-2,800 a tonne (f.o.b.). Indian parity is at $3,100 a tonne (c&f).

Given this scenario, the pepper prices are unlikely to drop below $2,500 a tonne this year, market observers here told Business Line.

Therefore, every dip in the prices here would be advantageous for the investors to invest in the commodity.

The prices in the futures have shot up during the week from Rs 704 to Rs 1,086 a quintal because of the over-excitement of the speculators and the activities of market manipulators. Spot prices shot up by Rs 600 a quintal. Therefore, a technical correction is likely to take place in the coming days.

IPC

According to the International Pepper Community (IPC) report, during the week (March 19 - 23) black pepper market was moving up slowly despite harvesting in Vietnam. Trading was limited there as farmers were not willing to sell materials and instead held on to new stocks. The prices were reported stable. At Daklak, the price for raw materials was VND 35,000 a kg.

In India, activities at local market were increasing and prices moved up by around 2-8 per cent. At Kuching, local prices increased further but activity was limited. In Lampung, the market was very quiet due to tight stocks available. The price at local market was stable. Upon conversion, however, there was a 1 per cent increase due to the strengthening of rupiah against the dollar compared to last week.

White Pepper

In general, trading was limited. In Sarawak, however, local price increased while f.o.b. was reported stable. In Bangka, the market was quiet as only limited quantities of materials were available. Local price was unchanged at around IDR30,000 a kg. Like black pepper, there was a 1 per cent increase due to the strengthening of the rupiah against the dollar.

FUTURES STEADY

On NCDEX, April contract dipped by Rs 13 to close at Rs 13,120 a quintal from Rs 13,133 on Friday. The other contracts moved up by Rs13 to Rs 211 a quintal.

On NMCE, April contract dropped by Rs 43 to close at Rs 12,704 a quintal from Rs 12,747. The other contracts except Aug moved up by Rs 2-206 quintal. Aug declined by Rs 16 a quintal.

The total turn over on NCDEX fell by 14,153 tonne to 17,641 tonne while on NMCE, it dropped by 1,749 tonne to 3,373 tonne.

The total open interest on NCDEX on Saturday dropped by 374 tonne to 28,649. The Apr position fell by 442 tonne to 10,221 tonne while May moved up by 97 tonne to 12,194 tonne.

On NMCE, the total open interest went up by 164 tonne to 4,233 tonne. Apr position was at 320 tonne while May moved up by 153 tonne to 2,636 tonne.

Domestic demand continued to be good. The spot prices ruled steady at Rs 11,800 (un-garbled) and Rs 12,400 (MG 1). The upward trend in the futures marked has led to the sellers withdrawing from the market anticipating further rise in the prices.