The Hindu Business Line : Pepper: Right time to invest

Demand picks up
The extraction industry has been buying immature light pepper at Rs 90-105 a kg in Kerala.
The crop in the southern districts of the State is claimed to be less by more than 50 per cent.
Also exporters having commitments for December are also buying spot.

Kochi , Dec. 17

Given the current tight availability position of pepper in the domestic and other origins and the sharp fall in the futuresprices, an ideal ground has been created for investment in pepper.

Domestic demand is in the process of picking up, as the inventories in the north Indian markets appear to have exhausted. The investors in Madhya Pradesh, the major centres, which used to cater to north Indian markets, have started buying spot directly from the primary markets after liquidating their stocks in the past three months.

Similarly after the sealing crisis in Delhi, the dealers have started buying, as also is the case with Mumbai dealers who are said to have lost substantial quantity of pepper following a major fire in a warehouse there.The extraction industry has been buying immature light pepper at Rs 90-105 a kg in Kerala. The crop in the State's southern districts is claimed to be less by more than 50 per cent. Besides, exporters having commitments for December are also buying spot. The harvesting, which normally starts by November, has yet to pick up and thus there is a tight supply position. Therefore, the situation is favourable for investors who could buy at every dip in prices, market observers here told Business Line.

No overseas demand

There is no overseas demand. The overseas buyers, who are currently waiting and watching, are expected to start buying after the holidays. Thus, increased domestic demand coupled with possible overseas buying early next year is expected to push up the prices.

The heavy bull liquidation in intra-day trading, an alleged manipulation, has crashed the market on Saturday.

Dec contract

The Dec contract on NCDEX fell sharply by Rs 352 a quintal to close at Rs 9,648 on Saturday from Rs 10,000 on Friday. The drop in other positions was from Rs 173 to Rs 354 a quintal.

On NMCE, Dec contract matured and 378 tonnes was delivered. January contract here fell by Rs 239 a quintal to close at Rs 9,499 from Rs 9,738 a quintal while the decline in other positions was from Rs 149 to Rs 276 a quintal except for February, which moved up by Rs 42 to close at Rs 9,900 from Rs 9,858.

The total turn over on NCDEX dropped by 8,237 quintal to close at 10,745 tonne from 18,982 tonne on Friday. On NMCE, it fell by 1,067 tonne to 953 tonne from 2,020 tonne.

Open interest

The total open interest on NCDEX fell by 785 tonne to 22.276 tonne from 23.061 tonne. December net open position dropped by 396 tonne to 2,202 tonne from 2,598 tonne. January position also fell by 594 tonne to 11,490 tonne from 12,084 tonne while February increased by 154 tonne to 4,475 tonne from 4,321 tonne.

On NMCE, the total open interest moved up by 69 tonne to 3,650 tonne from 3,581 tonne. On NMCE, March position increased by 56 tonne to 2,112 tonne from 2,056 tonne. January position was at 951 tonne.

The difference between futures and spot prices is narrowing down.

Spot prices ruled steady on buying support at Rs 9,300 (un-garbled) and Rs 9,900 (MG 1) a quintal on Saturday.

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