The Hindu Business Line : Indian black pepper to be more competitive

Indian black pepper is likely to be in the driver’s seat in the coming days being the cheapest in the world market on decline in prices on the futures market coupled with steep appreciation of the dollar against the rupee.

Indian parity has dropped to $3,000 a tonne (c&f). Vietnam is reported to have already sold out its current crop and whatever volume is left there is with strong exporters and stockists. Indonesia is not in the market as it has also sold out its current crop which was around 10,000 tonnes. The only other active origin, Brazil, is reported to have slowed down sales watching the situation. It has quoted B Asta at $2,800 a tonne (f.o.b.).

In fact, the end users and international operators are now trading with India for their Christmas requirements and, as a result, more demand is expected to come in the coming days, market sources told Business Line. The current financial crisis world over is unlikely to affect the pepper market because of its strong fundamentals, they claimed.

On the other hand, the tight supply position as against a higher demand could push up the prices. According to market sources, the prices might move up by Rs 800 to Rs 1,200 to Rs 13,675-14,075 a quintal. There is strong domestic demand which could also pave the way for a hike in the price and that in turn might see some release from the “Iron stocks”.

Lack of supply from the physical market and availability of the commodity in the exchanges at a discount force exporters to cover from there. They are taking position and taking delivery in the nearby month, they said.

Last week, the drop in all the contracts ranged from Rs 243 to Rs 560 a quintal on NCDEX while it was from Rs 66-Rs 506 on NMCE. Total turnover on the former dropped by 5,813 tonnes to 32,665 tonnes and on NMCE, it fell by 983 tonnes to 2,795 tonnes. Total open interest on NCDEX dropped by 757 tonnes to 17,496 at last Saturday close.

Spot prices dropped in tandem with the futures market trend by Rs 200 a quintal to close at Rs 13,000 (un-garbled) and Rs 13,600 (MG 1) at the last weekend close.

The investors who were buying spot and selling futures earlier were on the reverse mode liquidating spot and buying futures last week.

Selected end users from selected pockets in overseas markets, who prefer MG 1, were covering from India. Sharp fall in the value of rupee against the dollar has made imports of pepper costly, market sources said.

In August last 1,295 tonnes of black pepper were imported through Kochi port alone, they said. According to an overseas report in the international market, Brazil did not appear to be an aggressive seller nor was Indonesia.

Buyers are keeping away to put pressure on India and Brazil to lower the price and Vietnam did not seem to be interested to sell Asta grade.