The Hindu Business Line : Correction likely in pepper futures

Kochi April 8 A tight situation in Vietnam has resulted in the pepper market getting overheated and a correction is likely to take place in the near term. The situation, therefore, suggests that the investors should wait and watch till the situation changes in Vietnam.

During the week, the futures market shot up significantly. On NCDEX the increase was from Rs 1,215 to Rs1,431 a quintal, while on NMCE it was from Rs 1,002 to Rs 1,322 a quintal.

The total turnover on NCDEX shot up by 35,892 tonnes during the week while on NMCE it increased by 4,736 tonnes.

The total open interest on NCDEX increased by 3,782 tonnes to 31,704 tonnes, whereas on NMCE it moved up by 354 tonnes to 4,866 tonnes at Saturday close.

The spot prices also shot up by Rs 1,200 a quintal during the week.

Vietnam, which said to have defaulted in shipments involving large quantities so far, is likely to see some selling pressure by early next week.

The futures market on Saturday, seemingly as a correction, declined. On NCDEX Apr contract dropped by Rs 70 a quintal to close at Rs 15,230 from Rs 15,300 on Friday. All the contracts except August fell by Rs 3 to Rs 3 a quintal. August went up by Rs 166 a quintal.

On NMCE, April moved up by Rs 108 a quintal to close at Rs 14,699 from Rs 14,591. All the other contracts dropped and from Rs 31 to Rs 271 a quintal.

TURNOVER DROPS

The total turnover on Saturday dropped by 17,012 tonnes to 44,096 tonnes on NCDEX, while on NMCE it moved up by 627 tonnes to 7,680 tonnes.

The total open interest on NCDEX increased by 585 tonnes to 31,704 tonnes. April position declined by 12 tonnes to 3,802 tonnes, while May by 164 tonnes to 15,452 tonnes. June position moved up by 731 tonnes to 9,085 tonnes.

On NMCE, total open interest moved up by 63 tonnes to 4,866 tonnes. April position was at 339 tonnes while May at 3,052 tonnes.

Domestic demand slowed down because of the civic polls in Delhi and assembly elections in UP. Spot prices ruled steady at previous levels at Rs 13,900 (un-garbled) and Rs 14,500 (MG 1) a quintal at weekend close.

IPC REPORT

According to IPC weekly report, black pepper prices continued to be firm but market activities were slower. In Vietnam, the market was rather quiet as farmers were unwilling to sell pepper and prices increased further. At Daklak, raw material prices increased daily from Vietnam dong (VND) 37,000 a kg on April 2 to VND 39,000 on April 4.

In India, the market was quiet, but prices climbed further. At the Commodity Exchange, trading for April contract showed a downtrend. For May - June however, showed an upward trend. Prices till April 4 increased by 4-6 per cent.

In Lampung, the market continued to be quiet, but local prices were reported to have increased by 3 per cent. At Kuching, local prices increased marginally, while f.o.b prices increased by 2 per cent. In Sri Lanka, prices at pepper growing areas increased by (Sri Lankan) Rs14 to close at Rs 257.77 per kg this week.

White Pepper

At Pangkal Pinang, white pepper prices at local market eased by 3 per cent. Farmers in Bangka, who also worked as tin miners, due to cash problem, released some stock to get immediate cash. At Kuching, local prices were relatively stable, while FOB increased marginally by 1 per cent.

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