The Hindu Business Line : Pepper crashes on reports of increased supply in Indonesia

Kochi, Nov. 25 Pepper futures market after witnessing high volatility and an upward movement till 30 minutes before the close crashed on Tuesday on reports of large quantity of surplus pepper in Indonesia.

The prices fell sharply to the second circuit braker, market sources told Business Line. The Indonesian country paper on pepper presented by the Government on Tuesday at the International Pepper Community (IPC) Session currently under way in Vietnam said to have projected a carryover stock of around one lakh tonnes of pepper both black and white in that country.

Taking every member country to surprise, as against the earlier projection of 15,000 tonnes of black pepper and 5,000 tonnes of white in 2007, the Jakarta overnment presented a revised projection of 38,000 tonnes of black and 36,000 tonnes of white. Similarly, the revised projection for 2008 presented before the session was 40,000 tonnes of black and 37,000 tonnes of white as against the earlier projection of 20,000 tonnes and 5,000 tonnes respectively. Thus, the total carryover stock of 2007 and 2008 was put at 49,000 tonnes and 58,000 tonnes respectively. Added to this, the projection for 2009 was 42,000 tonnes of white pepper and 39,000 tonnes of black paper.

“Indonesia appears to be making a joke with the International Pepper Community,” a market source alleged.

Consequent to this information, the bear operators pulled down the market when it was Rs 50-70 a quintal above the Monday’s price. And then it fell to the lowest permissible levels of the day, he said.

TURNOVER UP

The turnover also shot up at the closing hours as investors were liquidating spot at a discount of Rs 200-250 a quintal below the today’s December price and buying back futures. December contract fell by Rs 466 a quintal to Rs 11,200. January and February dropped by Rs 470 and Rs 473 respectively to Rs 11,299 and Rs 11,365 a quintal on NCDEX.

Total turnover increased by 3,115 tonnes to 5,823 tonnes. Total open interest moved up by 35 tonnes to 11,474 tonnes. Net open position for December dropped by 193 tonnes to close at 5,570 tonnes while that of January and February moved up by 166 tonnes and 38 tonnes respectively to 4,801 tonnes and 674 tonnes.

SPOT PRICES FALL

Spot prices – in tandem with the futures market trend – fell by Rs 300 a quintal at Rs 11,000 (un-garbled) and Rs 11,500 (MG 1), much above the prices of all the first three deliveries.

Indian parity fell to $2,475-2,500 a tonne (c&f) Europe and $2,575-2,600 a tonne US. All other origins remained unchanged and overseas markets were reportedly quiet as the buyers were on a wait and watch mode.

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