The Hindu Business Line : Bearish trend continues in pepper prices

Kochi, Sept. 7 The recent trend in the pepper futures market shows that it is in the grip of bearish operators who, allegedly on the advice of the analysts of brokers, are pressurising the market to fall.

The total net open position for September is of 7,244 tonnes.

The continuous sell call by the brokers’ analysts is likely to create panic among the September holders who will be forced to liquidate.

That will push the prices further down.

Thus, decline in the September prices coupled with a weakened rupee will make the Indian parity competitive at $3,250 a tonne (c&f).

Notwithstanding, the exporters are not ready to cover from the exchanges “because they have no confidence in the material and, hence, they are not committing to overseas buyers as the reprocessing cost will raise the Indian parity to $3,325 a tonne (c&f) at the current futures prices for Sep delivery”.

This will make Indian pepper non-competitive as Vietnam is offering V Asta at $3,200 a tonne (c&f), while B Asta at $2,950 a tonne (c&f).

The International Pepper Community reportedly said that the Indonesian harvesting is over.

There haven’t been any offers so far and their internal prices continued to rule high, trading sources said.

During the week, all the contracts on NCDEX witnessed a sharp fall and the drop was from Rs 450 to Rs 534 a quintal while on NMCE it was from Rs 300 to Rs 590 a quintal.

September and October contracts were closed at Rs 13,425 and Rs 13,700 a quintal, respectively, as against the spot price of Rs 13,900 a quintal for MG 1.

Total turnover on NCDEX dropped by 11,226 tonnes to close at 22,234 tonnes, while total open interest declined by 53 tonnes to 19,952 tonnes.

Spot prices fell by Rs 300 a quintal to Rs 13,300 (un-garbled) and Rs 13,900 (MG 1) a quintal.

“It is clear, that the market continues its bearish tendency.

“Under these circumstances buyers, both domestic and export, are extremely reluctant and prefer to stay out.

“We need definitely some significant buying forces to keep this market from falling further. Hopefully, this will happen soon,” market sources told Business Line.

Meanwhile, the Union Government has extended the suspension of futures trading in rubber to November as the earlier suspension period is expiring this month.

Taking cue from this decision and given the present scenario in the pepper futures market, small dealers and growers are planning to urge the Centre to suspend futures trading in this commodity also.

The recent report of the United Nations Conference on Trade and Development (Unctad) that price movements in global commodity markets do not reflect the fundamentals and show excessive speculation is also said to have strengthened their demand.

“In the recent years, speculation may well have become excessive, amplifying price movements to such an extent that they no longer reflect market fundamentals,” the report said.

Unctad quoted a report of the US Senate on oil market as saying: “Although it is difficult to quantify the effect of speculation on prices, there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.”