The Hindu Business Line : Pepper futures market moves up

The tight supply position and the reluctance of the producers to reduce the price seem to have driven the pepper futures market to run on speculation.

Small investors are re-entering the pepper futures market, buying ready and selling futures on the anticipation that the prices might move up as the sellers are not inclined to offer any discount, which indicates of the persistent short supply position in the world market.

But, the buyers in the world market are holding back. However, the exporters having commitments are covering. Investors are also buying. This phenomenon coupled with speculative operations by "big cartels in Jhalgaon, Mumbai, Nagpur, Jaipur and Delhi have pushed up the futures market," market observers told Business Line.

Contracts

All the contracts on NCDEX and NMCE have shown substantial increase. The August contract at the former went up by Rs 265 to close at Rs 10,552 a tonne from Rs 10,287 a quintal, while at the latter it increased by Rs 300 to close at Rs 10,300 from Rs 10,000 a quintal. The increase in other positions on NCDEX was from Rs 238 to Rs 260 a quintal, while on NMCE it was from Rs 275 to Rs 354 a quintal.

The total turnover on NCDEX on Saturday dropped by 12,525 tonnes to 25,466 tonnes from 37,991 tonnes on Friday, while at NMCE it fell by 611 tonnes to 3,706 tonnes from 4,317 tonnes.

The total open interest on NCDEX was at 24,301 tonnes as against 24,283 tonnes; whereas, on NMCE it was 4,246 tonnes compared to 4,137 tonnes.

The outstanding position for August, September and October on NCDEX was 5,633 tonnes, 6,221 tonnes and 8,873 tonnes respectively. The international market has been inactive for want of buyers at the prevailing rates. The prices remained by and large unchanged.

A report said that Lampong Asta was quoted at $2,250 FOB while according to another August/October sales were quoted at $2,200-$2,425 a tonne (C&F) New York. The prices of Brazil ASTA was $1,775-$1,800 FOB while B1 560 GL at $1,725-$1,750 a tonne FOB. Indian parity is at $2,175-$2,375 a tonne (C&F). The spot prices in tandem with the futures market and on some buying support went up by Rs 100 a quintal to close at Rs 9,900 (un-garbled) and Rs 10,300 (MG 1) on Saturday.

Pepper Market

According to International Pepper Community report on Sunday, black pepper market at sources remained strong during the past week. At Kochi average spot prices increased significantly by 13 per cent for Malabar un-garbled black and 15 per cent for Malabar garbled black (MG). The futures market continued to be active and futures prices increased around 11-12 per cent. At Lampung, it was reported that prices at farm levels increased sharply to IDR 17,000 per kg from IDR 12,000 per kg during the last week. This was likely because of limited stocks available at the local market. Although the harvesting season has begun and demand is increasing, supply from farmers to local traders still limited as stocks from last year's crop have been sold out and output of this year crop is estimated to be significantly less than last year's crop. At Kuching, local prices increased from MR 6.56 to MR 6.75 per kg at the week's close. Compared to last week, the price has increased by 4 per cent.

In Vietnam, the market remains strong. At Daklak, average prices of raw material increased from VND 24,250 during last week to VND 28,125 per kg this week.

White Pepper prices also continued to increase. In Bangka, average prices at the local market increased from IDR 26,250 per kg during last week to IDR 28,000 this week, recording an increase of 7 per cent. In Sarawak, prices showed a significant increase of 5 per cent at local markets and 9 per cent for FOB. In Hainan, prices improved by 4 per cent. The persistent increase in white pepper price has an impact on the black pepper as conversion to white is on the rise resulting in shortage in black pepper supply.

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