The Hindu Business Line : Firm rupee keeps pepper non-competitive in world market

Kochi, Aug 10 Pepper futures market witnessed high volatility during the week on bearish and bullish speculative activities. The August contract dropped by Rs 280 a quintal to close at Rs 13,910.

The fall in other contracts was from Rs 70-307.

Total turnover fell by 10,891 tonne to 35,858 tonnes. However, open interest moved up by 450 tonne to 20,412 tonnes.

Spot prices declined by Rs 100 a quintal to close at Rs 13,700 (un-garbled) and Rs 14,300 (MG 1).

Strengthening of the rupee and the improvement in the stock market has kept the Indian parity non- competitive in the world market. All other origins were easier except Indonesia where the harvesting is expected to begin late this month or early September.

Domestic demand

However, strong domestic demand would hold the Indian pepper prices at higher levels.

Internal demand has started to pick up in view of the ensuing festival season. It is evident from the firm spot price for MG 1 which is Rs 400 a quintal above the August delivery.

Buyers from the upcountry markets are moving around in the primary markets and growing areas ready to offer higher prices.

Exporters do not appear to be interested in covering from the exchanges despite the price for August remained far below the spot price on the apprehension about the quality of the material, which if bought the re-processing cost would push up the prices, market sources told Business Line.

Global market

In the international market, Brazil is reportedly offering B Asta at $3,000 a tonne (fob) Belem. Because of the quality constraints and the additional costs involved in sterilisation most of the US buyers are not said to be buying pepper from there.

According to overseas reports, Vietnam Asta grade pepper is available at $3,400-3,450 a tonne (c&f) and some business was taking place. Where as, the Indian pepper parity remained non-competitive, it said.

Indonesia is, in fact, not in the market as its crop is expected to hit the market only by late August or early September. Besides, the crop is estimated to be less by 10-15 per cent from that of the normal crop.

The latest projection is that it is going to be around 10,000 tonnes. Carry over stock is also said to be very thin because of the high cost involved.

Exhaustion of the current stock in Vietnam and the emergence of a poor crop in Indonesia could only pave the way for demand coming to India, they said.

Vietnam output cut

Official statistics from Vietnam Pepper Association has showed that during the first seven months of the current year it had exported 50,983 tonnes of black pepper and 6,033 tonnes of white pepper. Since 8,619 tonnes of black pepper are required for producing 6,033 tonnes of white, the total exports could be put at 59,602 tonnes of black pepper, a report said.

According to the report it does not include the border trade which is estimated to be normally 5,000-15,000 tonnes a year.

In addition, the domestic consumption is said to be around 5,000 tonnes. Given this scenario the availability in Vietnam could be thin, they claimed.

According to market sources August is usually a slower month for the commodity and the prices are likely to move up by the end of summer.