The Hindu Business Line : Domestic demand continues to push up pepper prices

However, the strong domestic demand in India, which is the inherent strength of the commodity in the country with a heavy consumption of an estimated over 50,000 tonnes a year, has been pushing the market up as evident from the rise in prices of all the deliveries on the NCDEX at the weekend-close on Saturday.

November contract moved up by Rs 158 a quintal to close at Rs 11,500 while Dec and Jan went up by Rs 320 and 298 respectively during the week’s close on Saturday at Rs 11,680 and Rs 11,700 a quintal. The increase in other contracts was from Rs 234 to Rs 430 a quintal.

Turnover

The turnover fell by 11,342 tonnes during the week to close at 24,842 tonnes from 36,184 tonnes. Total open interest also slipped by 374 tonnes to 12,839 tonnes at Saturday close. Nov net open position dropped by 1,345 tonnes to 1,819 tonnes.

At the weekend, “badla” re-entered the market and it has had its impact. Investors were liquidating only validity-expired stocks. Large quantities were being bought by dealers from the primary markets to meet their upcountry requirements. The material was being sold at Rs 200-250 a quintal below the Nov price.

The heavy internal demand for the winter months and from the grinding industry is mainly met by purchases from the Madikeri region of Karnataka where the crop is said to be better than that of last year.

The output in Kerala is reportedly low this year because of the erratic weather and diseases such as quick-wilt, market sources told Business Line.

National output

Bearish reports from analysts of early crop and procurement of light berries by extraction industry from the southern districts of Kerala appears to have not made any impact on the prices in the closing days of the week. The total national output of the new crop is estimated to be around 45,000 tonnes.

International markets

In the international market, all the origins remained steady/ unchanged. Overseas buyers were quiet. Meanwhile, brokers in the US were quoted by an overseas report as saying that Americans had already covered for even the first quarter of 2009. However, this has not been swallowed as it is by the exporters here who believe that it is a tactic aimed at depressing the prices.

Any way, there is a tight supply position persisting in the world market this year and it is likely to continue till the beginning of the second quarter of 2009. Since black pepper is a food ingredient its consumption is unlikely to be affected negatively by the current economic recession, they said.

Indian parity despite the increase in futures prices remained competitive in the international market because of the sharp fall in the value of the rupee against the dollar.