The Hindu Business Line : Indonesia figures depress pepper market

Kochi, Nov. 28 The global pepper production in 2008, with the alleged inflated figures presented by Indonesia, is estimated at 2.91 lakh tonnes as against 3,02,928 tonnes in 2007, while the projection for next year has shown an increase of around 14,000 tonnes.

According to the figures released by the International Pepper Community (IPC) at its 36th session currently underway in the Vietnamese capital, Ho Chi Minh City, the Indonesian production in 2008 has gone up to 47,000 tonnes in 2008 (27,000 tonnes black and 20,000 tonnes white pepper) against the earlier projection of 15,000 tonnes of black pepper. The projection for 2009 is estimated at 62,000 tonnes with 42,000 tonnes of black and 20,000 tonnes of white pepper.

The projection for 2008 has been estimated at 43,000 tonnes, while the projection for next year is 50,170 tonnes.

The Indonesian figures have taken every member country of the IPC by surprise as the figures were highly exaggerated, some of the Indian delegates attending IPC meeting told Business Line. The price was on an upward trend when this revelation came out, they said.

Reasons

The reasons for bringing out such inflated figures, they said, are that either they have finished their crop and hence wanted to depress the market or they have sold heavily and did not have stocks for which they wanted to cover other origins at lower rates. Indonesia used to sell MSLV which they cover from India or/and Vietnam for shipments to the US, they said. “They used to enter into multi-origin contracts for Asta grade from any origin and ship out to the US,” the sources pointed out.

The reports of increased availability in Indonesia have depressed the market which has already been negatively affected by the world economic recession. The consequent credit squeeze has weakened the global demand. In India, the bear speculative operators, who were seemingly waiting for an opportunity, had pulled the prices down, they said.

Brazil Pepper Trade Board sources said the Indonesian Country paper had shown an “immediate and short term availability of over 80,000 tonne”.

In fact, they said, “everybody was absolutely surprised with this information as it could change the whole notion of the world market”.

Admitting error

However, the next day Indonesia officially admitted that there was an error in its paper, they said.

It will take some time now to remove the damage it has done to the market, Market sources here told Business Line.

The market will remain dull this weekend, they added.