The Hindu Business Line : Pepper futures gain on tight supply

Pepper futures market continued their upward swing on Wednesday also on tight supply position. There were no arrivals even when there was good demand from the internal market.

All the contracts moved up. Aug - Sep were up by Rs 145 to Rs 169 while Nov- Jan contracts went up by Rs 104 to Rs 132 a quintal from the prices of Tuesday. Spot prices moved up by Rs 100 a quintal to close at Rs 13,800 (un-garbled) and Rs 14,400 (MG 1) on Wednesday.

Besides, dollar has strengthened against Rupee. At present, the Indian parity remained competitive at $3,550-3,650 a tonne (c&f). Total turn over increased by 1,077 tonne to 8,378 tonne on NCDEX. Total Net Open interest declined by 168 tonne to 20,267 tonne. Aug and Oct dropped by 264 tonne and 94 tonne respectively, while Sep moved up by 135 tonne.

In the international market, Vietnam was offering 500 GL at $2,800 a tonne (FOB) and V Asta at $3,500 - $3,550 a tonne (f.o.b). L Asta continued to rule firm. Brazil was reportedly not aggressive on Wednesday. MG 1 was being offered at $3,700 a tonne (C&F).

The global scenario is also reported to be not encouraging as the output in Indonesia is projected to be less. Brazil production is also said to be around 25,000-30,000 tonne this year. Add to this a latest report from Vietnam quoting Vietnam Pepper Association officials, has said that shipments of pepper from there might fall by "almost 10 per cent this year as farmers hold back stock because the central bank's interest-rate increases are raising their costs."

Vietnam exports

Exports are projected at 75,000 tonnes from 83,000 tonnes last year. The estimate is based on the decline in the volume of exports during Jan - May 2008, they said.

"Exporters' production costs have increased after the State Bank of Vietnam raised interest rates three times this year to slow the fastest inflation since at least 1992. Producers may hold back stock to wait for higher prices next year," the report said.

Banks increased lending rates to as much as 21 per cent, it said.

They are pinning hope on the assumption that the prices would increase based on the projected shortage of 54,000 tonnes by the International Pepper Community (IPC), they said.

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