The Hindu Business Line : Pepper prices continue to slide on selling pressure

Reports of possible restoration of advance licence facility to oleoresin industry with track record for import of pepper have pushed the prices down by Rs 100 a quintal midweek. However, when another report came saying that the Government would extend subsidy for pepper, the prices improved by Rs 100 a quintal on Saturday.

The spot prices on Saturday for MG1 were Rs 6,500 and for un-garbled Rs 6,100 a quintal as against Rs 6,600 and Rs 6,200 a quintal on April 23.

Futures prices also showed a downward trend. May delivery was at Rs 6,315 as against Rs 6,565 a quintal on April 23. June Rs 6,337 (Rs 6,588), July Rs 6,168 (Rs 6,412), August Rs 6,803 (Rs 6,980), September Rs 6,899 (Rs 7,079) and October Rs 7,098 (Rs 7,283).

Domestic demand was very weak at the terminal market here as the demand is met by supplies from Karantaka, where pepper is sold at below Rs 60 a kg. Even they are selling at Rs 63 delivered at markets in North India, market sources here told Business Line.

"Domestic demand is wiped out for Kerala", he said.

The domestic demand is estimated at 60,000-65,000 tonne. It is the additional arrivals through imports are pushing the prices down. If the advance licence facility is restored, then there could also be spillage into the domestic market, they alleged.

On the other hand, suspension of procurement by the Kerala Government agency, Marketfed, which has procured around 4,800 tonne of black pepper, has also resulted in a selling pressure, they said. It is also reported that 4,700 tonne of pepper is also held by a multi commodity exchange in the Central Warehouse, they said.

In the international market Indian prices are competitive now at $1,500 a tonne as against $1,400-1,425 of Indonesia and $1,375-$1,400 a tonne of Vietnam. "Some demand is there". Difference of $100 for MG1 is acceptable in the international market and, in fact, selected buyers have shown interest to buy, they claimed. Add to this there is no pressure from Vietnam also. "Given this scenario MG 1 may get a market in May", they said.

However, reports of possible restoration of advance licence system and extension of subsidy for export etc could have a negative impact on these export demand. The buyers may resort to waiting on the anticipation that the prices might fall further, they pointed out.

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