The Hindu Business Line : Pepper unaffected by turmoil in global markets

The reasons attributed to such a scenario are the tight supply position in Vietnam and India, on the one hand, and the strengthening of the Brazilian currency against the dollar, on the other. Consequently, the Brazilian pepper prices have gone up, signalling a hike in the pepper prices in the world market.

INDIAN MARKET UP

In India, already the market has shown signs of upward swing on thin availability and good demand, as the domestic buyers have become active including the grinding industry to cover for their requirements for the winter season. In India, the domestic market plays the key role to keep the pepper prices high, market sources told Business Line.

BRAZIL SUFFERS

Meanwhile, according to the Brazil Pepper Trade Board sources, the current financial turmoil world over has caught all the Brazilian players while the harvest is in full swing.

On Friday, they said, the exporters are getting a hard time trying to understand and position themselves. “However, up to this moment no panic or likewise feeling has arisen. They simply stay out of market hoping it will clear up soon without any hurry for immediate sales,” they said.

Sooner the biggest issue was Vietnam, where the prices dropped sharply despite reports of selling out fully its crop. It happened at a time when it was expected to step out of the market. “The surprise was big – so it seems that Vietnam’s crop this year was much bigger than announced,” they claimed.

The stock market crash then came followed by sudden rise of the dollar rate. In two days almost 2,000 tonnes were sold at $2,200 and $2,300 a tonne.

The third day, dollar weakened and the pepper price bounced back to around $2,700 a tonne level.

The BPTB sources said for the last 10 days the banks shorted up the credit lines. Brazilian pepper exports were always based on short term credit line as in a normal sale a 60 days turnover is financed by the bank.

Without this line exporters need to have some share of the payment to be received immediately to minimise their risks. So 30 per cent or even 50 per cent is essential for their security. Most of Brazilian exporters of spices are not used to hedge the dollar rate.

So they wait. It is possible that one or another exporter may need some immediate cash and accept to sell a lot or two at a much lower price but this is rare as most of them have a good financial situation at this moment at least.

“So their sentiment (and the trend) is upwards at the moment. Some rumours spread over the media try to transform exceptions into trend but it smells fake to some extent - looks like a trial of manipulation”, they alleged. Exporters inquired today, both from Belem and Vitoria, and the reported fob prices for B1 560 GL were in between $2,700-2,800 a tonne for November shipment, they said.

VIETNAMESE TRADE

Earlier, an overseas report said that during the first nine months of the current year Vietnam had exported 71,043 tonnes of pepper, of which 63,068 tonnes were of black and 7,975 tonnes of white. Since, 7,975 tonnes of white is equivalent to 11,393 tonnes of black, the actual volume of black pepper exported would come to 74,461 tonnes, it said.

The domestic consumption estimated at around 8,000-10,000 tonnes a year and border trade ranging from 5,000-20,000 tonnes has not been included in the export figures, the report said.

At the moment, China is buying back. China is just one border away from Vietnam.

The (next) new crop from Vietnam will hit the markets in March, which is 4-5 months away, it added.

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