The Hindu Business Line : Pepper market down on bearish activities

Kochi, Aug. 26 The pepper futures market during the week witnessed sharp decline in prices due to bearish activities and the quantity restrictions on nearby month position, which has hampered the exporters from covering.

Even at the weekend close, the market dropped on alleged market manipulations to take advantage of three-day bank holidays on account of Onam and Sree Narayana Guru Jayanti.

Downward Trend

Those who bought from speculators wanted to sell and get out of it but could not do so for want of buyers.

In fact, the exporters wanted to buy at the current rates as there are overseas buyers at the present rate but they could not do so due to the quantity restrictions.

However, overseas industrial users are buying from selected exporters at the prevailing rates. But it is done in a manner without affecting the market, sources told Business Line.

According to international market reports, influenced by the downward trend in India, Brazil and Indonesia have showed aggressiveness in selling at lower rates.

But buyers are still reluctant anticipating that the prices might fall further. Surprisingly, the fall in black pepper prices has not so far reflected on the white pepper prices, which continues to rule firm.

Prices

All the contracts on NCDEX dropped by Rs 902 to Rs 1,051 a quintal during the week and the closing price of September contract on Saturday was Rs 12,193. On NMCE the contracts fell by Rs 600 to Rs 932 a quintal.

The closing price on Saturday for September contract was Rs 12,101 a quintal.

The total turnover on NCDEX during the week went up by 17,206 tonnes to 1,26,902 tonnes while on NMCE it increased by 4,217 tonnes to 11,622 tonnes.

The total open interest also during the week moved up 143 tonnes on NCDEX to 22,718 tonnes while on NMCE it increased by 363 tonnes to 2,370 tonnes. Spot prices in tandem with the futures market trend fell by Rs 500 a quintal during the week to Rs 12,200 (un-garbled) and Rs 12,800 (MG 1).

IPC report

The continuous fall in pepper prices in India with a production of an estimated 40,000-45,000 tonnes and with limited stocks and as against a huge domestic market which absorbs somewhere between 40,0000 and 50,000 tonnes a year, does not seem to be market driven, market observers pointed out. According to International Pepper Community (IPC) the overall black pepper market continued to remain quiet.

In India, after high volatility, futures prices declined during the week for all contracts. Due to quantity limitations, Indian exporters were uncommitted.

On the other side, international buyers were waiting and watching for further developments with interest to cover at bid prices. The continuous price decline in India seemed to have influenced prices at other origins.

In Lampung, prices at farm levels eased further by around IDR 1,000 a kg compared to last week.

In Sarawak, local prices declined from MYR 14,940 a tonne to MYR 14,890 a tonne at the week’s close. FOB prices also eased marginally by 1 per cent.

There were no prices reported from HCMC, but prices for raw materials at Daklak, Vietnam eased from VND 48,000 a kg to VND 46,000 at the week’s close.

WHITE PEPPER

The market for white showed a mixed trend. Prices in Bangka were reported to have increased marginally with limited activity.

White pepper prices eased by 1 per cent in Sarawak and by 7 per cent (local and FOB) in Hainan, China.