The Hindu Business Line : Pepper may gain on tight supply

Kochi April 29 The current situation in the world pepper market signals that the prices of the commodity are likely to rule higher and, hence, every dip in the Indian prices could be an ideal opportunity for the investors to invest.

According to a latest Vietnam Pepper Association (VPA) report, export prices of pepper in that country is destined to soar next month on global short supply and high demand.

Stockpiling

It has forecasted that export prices might hit the 1998-2000 level of $4,000-5,000. The Vietnam domestic market price had already shot up to Vietnames dong (VND) 43,000 a kg from VND 21,000 a kg at the beginning of the current season as a result of stockpiling of pepper products for export.

Vietnam, which is the only source at present having pepper stocks, is said to be following a strategy of regulated release so as to push up the prices. Other origins Brazil and Indonesia do not seem to be holding any significant stock. India having a huge domestic market also does not have much to offer. Given this situation, the world pepper market is facing a tight situation.

Tight Supply

The International Pepper Community, the VPA report said, had predicted of a tight supply position in the global market from the 2007-08 crop because of 3.46 per cent increase in consumption demand and an estimated 20 per cent drop in production caused by unfavourable weather and diseases. Vietnam Government officials were quoted as saying that value of pepper surged by 72 per cent since 2006.

During the week the prices on NCDEX fell from Rs 769 to Rs 917 a quintal, while on NMCE the drop was from Rs 335 to Rs 558. The turnover on NCDEX moved up by 27,246 tonnes to 2,67,687 tonnes. On NMCE it dropped by 10,431 tonnes to 24,089 tonnes.

The total open interest during the week on NCDEX dropped by 3,111 tonnes to 28,555 tonnes while on NMCE it moved up by 29 tonnes to 4,144 tonnes.

FUTURES MOVE UP

After sharp fall during the week the futures market moved up on Saturday. May contract on NCDEX increased by Rs 217 a quintal to close at Rs 14,928 from Rs 14,711 on Friday. The increase in other contracts was from Rs 148 to Rs 376 a quintal.

On NMCE May contract went up by Rs 247 a quintal to close at Rs 14,370 from Rs 14,123. June, July and October moved up on Saturday while August and September declined by Rs 8 and Rs 124 a quintal respectively.

Total open interest at NCDEX improved by 142 tonnes to 28,555 tonnes. May position declined by 424 tonnes to 9,689 tonnes while June moved up by 504 tonnes to 13,295 tonnes.

On NMCE the total open interest on Saturday moved up by 51 tonnes to 4,144 tonnes. May position was at 2,129 tonnes up by 57 tonnes.

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