The Hindu Business Line : Pepper futures drop on lack of demand

Kochi, Sept. 4 Pepper futures market continued to decline on bearish activities and lack of demand. September contract dropped by Rs 41 a quintal to Rs 13,920, much below the spot price of Rs 14,200 a quintal for MG 1. October and November declined by Rs 40 and Rs 42 a quintal to Rs 14,203 and Rs 14,442 respectively. Total volume on NCDEX increased by 175 tonnes to 3,089 tonnes, while total open interest also moved up by 260 tonnes to 20,071 tonnes.

There was no selling pressure on the spot. No overseas demand was forthcoming. Despite the decline Indian parity remains uncompetitive as other origins are easier.

Spot prices remained at previous levels of Rs 13,600 (ungarbled) and Rs 14,200 (MG 1) a quintal. The widening gap between the spot and September contract is not a healthy sign and will send out wrong signals to the growers as well as the overseas buyers, trading sources said.

They alleged that the futures market was working against the fundamentals. The futures and ready prices should converge at the time of delivery. It is not happening in the market.

Weighing factors

On the other hand, the exporters are not ready to take delivery because of various factors such as weight and quality of the material etc.

“It is high time that the regulator should take steps to rectify these anomalies so as to instil confidence in the small dealers and farmers apart from the overseas buyers,” they said. In the international scenario, the market remained weak with limited demand from the US and Europe . A strong dollar also contributed to this situation. Vietnam eased and was offering Asta grade at $3,350-3,400 a tonne C&F New York.

However, Lampong was quoting L Asta at $3,600 a tonne C&F. Brazil Asta was offered at $2,900 a tonne (f.o.b.) Belem. According to international market sources, the market is unlikely to recover till the emergence of fresh demand. The US elections also contribute to the dullness in the US pepper market.

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