The Hindu Business Line : Pepper market moves hinge on Vietnam situation

Kochi March 31 The current trend in the international market shows changes for an upward swing given the short supply position. Not much buying is taking place in the international market. Any change in the scenario is expected to happen only when there is a selling pressure in Vietnam where the farmers are holding back till the prices moved up to their anticipation. Buyers were trying it cool without disturbing the market, market observers told Business Line.

Outpriced

The prices in Vietnam said to have gone up by $50 that that of Friday, while Brazil has been offering of late at $2,900-3,000 a tonne (c&f). Indian pepper is now out-priced at $3,300 a tonne (c&f).

Good domestic demand is keeping the price here on the higher levels. During the week futures market has seen an increase of Rs 755 to Rs 1,372 a quintal. The turnover went up by 81,515 tonnes. The open interest dropped by 727 tonnes to 27,922 tonnes. Spot prices went up by Rs 900 a quintal to Rs 12,700 (un-garbled) and Rs 13,300 (MG 1). However, it was down by Rs 100 a quintal from that of previous week's close.

The spot prices ruled steady at previous level of Rs 12,700 (un-garbled) and Rs 13,300 (MG 1) a quintal.

Investors were buying against their sales in the futures market. At present there is an element of uncertainty on the price movement and a clear position might emerge in a couple of weeks.

UPWARD TREND

According to International Pepper Community (IPC) on Saturday the black pepper market during the week (26 - 30 March 2007) showed an increasing trend.

Vietnam, the largest pepper supplier is now in the peak of harvesting season and driving global market. At HCMC, trading is very active as demand overwhelms supplies of new crop. On the strength of good coffee return the farmers are not willing to sell their produce unless prices meet their expectations. Available stocks are absorbed quickly and price increases daily.

In India, the market increased and prices moved up steadily. Activity at the Commodity Exchange was brisk particularly for April and May contracts with futures prices increasing by around 8 per cent.

In Sarawak, stocks are limited and new materials are only expected to arrive in May/June. Prices at Kuching increased for both local and FOB.

In Lampung, the market was quiet as available material was very limited. Crop size in July/August is encouraging but it would depend on the weather conditions in the next few months ahead. Producers' prices during the week increased by three per cent.

Brazil is not a factor, as inventories are held in strong hand. FOB price was reported at $2,650 a tonne for April shipment.

FUTURES UP

The futures market on Saturday moved up not much trading has taken place because of the Bank holiday.

April contract on NCDEX went up by Rs 59 a quintal to close at Rs 13,859 from Rs 13,800 on Friday. The increase in other contracts was from Rs 57 to Rs 158 a quintal. The rise in distant positions was higher.

On NMCE April contract increased by Rs 116 to close at Rs 13,425 from Rs 13,309 a quintal. The rise in other contracts was from Rs 84 to Rs 275 a quintal.

The total turnover dropped sharply by 20,032 tonne to 25,648 tonne on NCDEX while it fell by 2,399 tonne to 4,284 tonne on NMCE.

The total open interest on NCDEX slipped by 181 tonne to 27,922 tonne. April position dropped by 367 tonne to 5,906 tonne May by 471 tonne to 13,232 tonne. June went up by 575 tonne to 6,001 tonne.

On NMCE total open interest moved up by 5 tonne to 4,512 tonne. April position was at 325 tonne while May at 2,845 tonne.