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G.K. Nair

Kochi, Dec 21 Buying interest from overseas appears to have activated the Indian futures market during the latter part of the week pushing up the black pepper prices of all the contracts.

Overseas buyers who had lowered their inventories after the beginning of the current economic slowdown from mid this year, have started entering the market to cover for their immediate commitments, market sources told Business Line. Since pepper is a food ingredient, it cannot be avoided by the consumers and, hence, there cannot be a complete dry up of the demand, they said.

But, availability of the material is tight in all the origins. In India, over 50 per cent of the stocks held by the exchange has been delivered on Saturday on maturity of the Dec delivery. In fact, the exporters are not getting ready pepper as there is no flow in to the terminal market from the primary markets.

Exporters are trying now to source the material from the primary markets where the rich farmers are holding iron stocks. But, they are said to be reluctant to part with their produce at the prevailing prices.

Apart from this, there is a good domestic demand from the traders as well as the grinding industry.

Given this tight supply position on the one hand and potential good demand from domestic and overseas markets, the prices of MG 1 have every chance to move up in the coming days i.e., till the Vietnamese new pepper hits the market in March/April, they said.

More orders are expected to come to India, as it is the only source where at least some quantity of the material is available at present.

Current spot prices in the two major foreign markets could be taken as an indication of the prevailing tight supply situation.

Spot price of black pepper quoted on Saturday in New York and Rotterdam was $2,800 a tonne. In the international market, Indian parity remained competitive at $2,300 a tonne (f.o.b.). Indonesia and Vietnam were offering their Asta grade at $2,500 and $2,400 a tonne (f.o.b.) respectively. Brazil has quoted B Asta at $2,050-2,100 a tonne.

All the contracts during the week in India moved up by Rs 92 to Rs 125 a quintal. Jan was closed Rs 10,287 a quintal on Saturday. Total turn over increased by 1,812 tonnes to 21,352 tonnes at the weekend. Total open interest fell by 957 tonnes to 8,289 tonnes at the weekend close.

Spot prices, however, showed a drop of Rs 200 a quintal during the week to close at Rs 9,800 (un-garbled) and Rs 10,300 (MG 1) on Saturday from that of the previous weekend close.

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