The Hindu Business Line : Pepper may gain on tight supply

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Kochi March 4 Every dip in the futures market is a good opportunity for the investors to buy pepper given the prevailing tight supply position in the domestic and world market.

The market at present is fluctuating depending upon the financial muscle power of the bulls and the bears, market observers said.

In the international market, offers from Vietnam is expected to commence from mid-March. But, according to latest information prices there are likely to rule high contrary to expectations.

According to Vietnam Pepper Association (VPA), "this year's weather is inconvenient for pepper cultivation, as a result, black pepper volume for export will be reduced by 10 per cent. VPA is searching for material sources from Cambodia and Indonesia to make up for the deficiency."

Foreign investments

On the other hand, foreign investments are said to taking place in Vietnam in pepper processing and marketing and that might also contribute to good quality and a consequent increase in prices.

Meanwhile, since the prices are ruling high overseas buyers are waiting for prices to drop after selling pressure builds up in Vietnam later this month. In the futures market, prices declined marginally on bearish operations. Investors who had sold futures are ready to buy spot NCDEX delivered.

On NCDEX, March contract dropped by Rs 45 a quintal to close at Rs 12,352. The decline in other contracts was from Rs 6 to Rs 29 a quintal.

On NMCE, March contract fell by Rs 79 a quintal to close at Rs 11,601. The fall in other contracts was from Rs 40 to 81 a quintal.

Turnover

The total turnover dropped by 45 per cent from that of Friday, while the net open position moved up by 2 per cent on NCDEX.

On NMCE also, the turnover fell by 1,210 tonnes to 1,841 tonnes, while the net open position moved up by 86 tonnes to 5,429 tonnes.

The spot prices ruled steady at Friday's level of Rs 11,400 (un-garbled) and Rs 12,000 (MG 1) a quintal on Saturday.

However, compared to the previous weekend close all the contracts on both NCDEX and NMCE showed a fall. On NCDEX, the drop was from Rs 67 to Rs 137 a quintal, while on the NMCE it was from Rs 115 to Rs 285 except for July and August, which went up by Rs 68 and Rs 273 a quintal respectively.

IPC report

According to an IPC report on Saturday black pepper market was quiet during the last few weeks as most suppliers in Vietnam, Malaysia, Indonesia and China were celebrating Lunar New Year. This week, however, saw some signs of renewed activities in the market. Buyers' requests were increasing but transactions were still limited.

In Vietnam, the market was active. Prices for black at Ho Chi Minh City were VND 37,000 a kg for local purchases and FOB $2,350 a tonne and $2,430 a tonne for 500g/l and 550g/l respectively. At Daklak, raw materials moved up by VND 2,000 a kg to VND 34,000 at the week's close.

In India, the market slowed down after few weeks of activities. Volume traded at the Commodity Exchange declined and prices eased by 2-3 per cent.

In Sarawak, local prices continued to firm up, but FOB price was stable at $3,300/mt. In Lampung, prices were unchanged.

White pepper market was steady with limited activities. Raw materials at Bangka remained tight, but prices were down by 2 per cent. FOB price, however was unchanged at $3,595a tonne. In Sarawak local price moved up slightly by 1 per cent with FOB price unchanged at $4,100 a tonne. In Hainan, white pepper prices for FAQ increased by $30 a tonne to $3,200 (locally) and $3,400 (FOB). In Ho Chi Minh City, local price was VND 58,000 a kg.

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