The Hindu Business Line : Pepper futures rule steady on short supply

Contrary to expectations, no sales took place at the auction held by the Kerala state procurement agency, Marketfed, on Tuesday as the sellers stuck to Rs 6,700 a quintal while the buyers did not move beyond Rs 6,650 a quintal.

The presence of around 13 buyers from the primary market to buy the farm grade ungarbled pepper indicated the tight situation prevailing in the market. Surprisingly, such a phenomenon has emerged at a time when the processed commodity is available in the warehouses of the exchanges at prices much below the spot prices.

Meanwhile, investors who have bought from NMCE are finding it difficult to deliver to the NCDEX for want of space in warehouses, market sources told Business Line.

They said that goods were neither moving out of the country nor the state and it is just making rounds here only, indicating some regulatory problem. This situation has led to a sluggish market.

International market has shown some activity. Vietnam is said to have raised its prices by $25-$50 a tonne.

ASTA was being offered at $1,575 a tonne (C&F) while 500 G/L at $1,325 and 550 G/L $1,375-$1,400 a tonne. Prices of other origins remained steady at previous levels.

May position was up by Rs 19 a quintal to close at Rs 6,605 against Rs 6,586 on Tuesday at NCDEX, while at NMCE it went up by Rs 23 to Rs 6,889 from Rs 6,866 a quintal.

The last trading price at NCDEX for June, July and August positions showed a decline from Rs 10 to Rs 20 a quintal, but in the case of September, October and November it showed an increase from Rs 31 to Rs 68 a quintal.

At NMCE, July position declined by Rs 14 while all other positions showed an increase ranging from Rs 2 to Rs 229 a quintal.

The total turnover at NCDEX was 2,458 tonnes on Wednesday against 4,029 tonnes on Tuesday while it was 190 tonnes against 452 tonnes at NMCE.

Open Interest at NCDEX was 22,277 tonnes compared with 22,013 tonnes on Tuesday. At NMCE, it was 2,427 tonnes on Wednesday against 2,388 tonnes on Tuesday.

Spot prices ruled steady at Rs 7,050 (MG 1) and Rs 6,650 (Ungarbled) a quintal. However, Karnataka has raised the price of farm grade pepper to Rs 7,300 a quintal anywhere in India from Rs 6,900 a quintal a coupled of weeks ago. The Sri Lankan price is also at par with this level.

IPC price index

The IPC Pepper Price Index declined in April 2006, by 1.5 points for black pepper and 1.9 points for white pepper. FOB prices of black and white pepper at most origins, with the exception of Sarawak, were reported to have decreased during the month.

The market for black pepper was focused on the developments in Vietnam as their crop dominates the market at this time. Trading activity at this origin continued to be active and the prevailing price was relatively stable during the month. Compared to previous months however, the average price was slightly down by one per cent.

Domestic scenario

In India, the market continued to be quiet and prices showed a decreasing trend. At the beginning of April, the price of ungarbled black was $1,515/tonne, but decreased steadily to $1,480/tonne at the end of the month. When compared to the previous month, the average price of ungarbled black fell by two per cent.

In Lampung, the market was very quiet. Local prices during the month were reported to have decreased steadily from $1,293 a tonne at the beginning of the month to $1,077 a tonne at month's close. The average local price declined significantly by eight per cent, compared to the average price during the previous month.

In Sarawak, the local price also showed a slight decrease by one per cent but FOB prices were reported stable. In Sri Lanka, the local price increased marginally by one per cent.

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