The Hindu Business Line : Pepper exporters gain from sale calls in futures

Kochi, July 21 Bearish reports and sell calls on a daily basis for black pepper at various commodity exchanges have turned out to be advantageous to exporters, who have been able to book some orders from overseas buyers.

The bearish sentiments which have been prevailing for the past few weeks have helped the exporter to cover themselves for May, June and July deliveries that traded below spot prices.

The situation has influenced domestic players also to keep away from the pepper market, though festive demand season is ahead, according to market sources.

However, the market remained volatile during last week and the Indian parity moved up to $3,850 -3,900 a tonne (c&f) on Saturday last.

Indonesian Crop

The upward move may have been influenced by the latest trend in Indonesia where harvesting is to begin next month.

Pepper prices in that origin were ruling much higher than all other pepper producing countries and therefore, Indonesian pepper was out from the world scenario, Mr Kishor Shamji, a former President, IPSTA told BusinessLine.

Indonesia was offering at $3,800 a tonne (c&f).

Brazilian Pepper

Brazilian pepper which needs additional cleaning process before getting it cleared by the US FDA inspection on arrival and the gas sterilisation charges as well as the regulations are getting tighter, the USA importers found Brazilian pepper not very attractive.

Brazil was quoting Asta grade at $3,175 - $3,250 a tonne last weekend.

Weak Dollar

However, currency factor influenced many exporters to ship out maximum quantities during the past several weeks for financial requirements to be met with, Mr Shamji said.

Indian pepper has been competitive due to weaker rupee against dollar and the bearish sentiments that was prevailing in the futures market at the national exchanges making the commodity available competitively below spot prices to the exporters who were covering nearby deliveries and committing to overseas buyers against export orders.

Thus, every month nearly 1,000 tonnes were taken delivery by the exporters.

Over and above, he said, even the investors who were holding stocks with expired validity were getting nervous due to the bearish reports by the commodity analysts also influenced them to liquidate their spot pepper at further discounted prices over nearby delivery and that also helped exporters to fulfil their export commitments.

Indian Exports Up

This has helped the Indian exports to move up to 12,200 tonnes during January-May, 2008 compared with 10,800 tonnes in the corresponding period last year.

Indian pepper production this year is estimated at below 50,000 tonnes.

Besides, there is an estimated carry forward stock of 25,000 tonnes available with the farmers/big dealers.

Indian consumption, on the other hand, is estimated between 50,000 – 60,000 tonnes.

Since crude prices started falling, the Indian rupee also gained strength and thus Indian pepper prices have become further uncompetitive in the world market.

On the other hand, the analysts who were bearish all along had turned bullish suddenly.

Bullish domestic market

Their power of the fund finance could push up future delivery prices, which activated many investors including national level co-operatives who were seen buying spot pepper at higher and higher level as they could sell in turn the distance future delivery positions at premium at the national exchanges.

Tight supply

It has facilitated the pepper prices moving up for the last few days as availability of spot pepper in the physical market was already tight, therefore the interest of the investors resulted in pushing the prices up for the spot pepper in tandem with the rise in the futures market which was moved up by bull speculators.

Meanwhile, deficient south west monsoon and an extended summer rains so far this year would result in a short fall in the next crop, they said.

More Stories on : Spices & Condiments | Exports & Imports | Commodity Exchanges

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Locally heavy rain in TN, Karnataka

Q1 cement despatches rise

Dhaka told to improve connectivity to cut trade deficit

One-year return turns negative for most diversified schemes

Will UPA govt pull it off?

Tech Mahindra bags $700-m outsourcing deal from BT

Maruti Q1 net skids despite higher sales

Dr Reddy’s net down 26% at Rs 134 cr

Re, input costs hit auto parts export growth rate

Pepper exporters gain from sale calls in futures

Markets cautious ahead of vote

Indian Bank (Rs 101.80): Buy

Courier industry reels under high oil price; costs rise 30%