The Hindu Business Line : Overseas buyers likely to cover Q1 pepper requirements from India

Kochi, Dec 17 Indications are that black pepper supply from Brazil is going to be tight in the coming weeks, which in turn could attract buyers to India to cover for their first quarter requirements.

Exports of pepper from Brazil during Oct dropped significantly to 2,937 tonnes from 7,579 tonnes in Oct 2006. The fall in export quantity reflected the crop situation this year, which is estimated to be lower than last year’s crop, according to the International Pepper Community (IPC).

It was reported that production of pepper in Brazil in 2006 was 44,500 tonnes, while in 2007, it is estimated to be only 35,000 tonnes. Carry over stocks in India and other origins are reportedly thin, while the exporters have finished with their stocks.

Given this scenario, overseas buyers are likely to turn towards India to cover for their first quarter (2008) requirements, market observers here told Business Line.

Tight supply position

Besides, in India, the harvesting has already been delayed due to the heavy rain fall and the output is also said to be not more than that of last year. Therefore, a tight supply position could be expected here also, they said.

Good domestic demand in the country is likely to keep the Indian parity at higher levels. However, at present, it is almost competitive in the world market.

The projected drop in the world availability in 2008 might help the prices to remain by and large at the current levels with chances of moving up depending upon the Vietnam crop arrivals in late March/early April.

Indian parity at the weekend close was at $3,600 a tonne (c&f). Some business said to have been concluded with the EU and the US buyers at $3,500 a tonne (c&f) during the week. This has pushed up the prices at the weekend.

During the week the futures market witnessed a decline in all the contracts. On NCDEX, the prices fell by Rs 113-259 a quintal. On NMCE, the draw was from Rs 171 to Rs 561 a quintal.

Total turn over on NCDEX fell by 3,186 tonnes to 85,292 tonnes while on NMCE it dropped by 1,932 tonnes to 6,482 tonnes.

Total open interest on NCDEX fell by 608 tonnes to 18,920 tonnes. On NMCE, it declined by 66 tonnes to 1,441 tonnes.

The spot prices during the week dropped by Rs 100 a quintal to close at weekend at Rs 12,600 (un-garbled) and Rs 13,200 (MG 1).

IPC Report

The world market, according to the IPC, was quiet. Prices at most origins were down.

In India, the market declined, as reflected by the decrease in the volume of trade at the Commodity Exchange. Stock carryover was reported tight as large exports have depleted holdings.

On an average, prices at Kochi have fallen by 2-4 per cent compared to last week.

In Lampung and Sarawak, local prices declined by around two per cent, but f.o.b. prices at Kuching were up marginally by $10 a tonne. In Sri Lanka, average price prevailing at pepper growing areas eased marginally.

In Vietnam, the market was also very quiet and prices eased by 1-3 per cent. At HCMC, price for local purchases was VND 47,000 a kg, down from VND 48,500 last week.

WHITE PEPPER

The market continued to be mixed. In Sarawak, prices for white pepper increased by 1-2 per cent, while in Bangka, local price eased by three per cent. In Vietnam and Hainan, also the prices showed a downward trend.

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