A disequilibrium in the demand and supply with the former outstripping the latter at the moment has pushed up the pepper prices to the highest ever levels last week.

At the weekend closing spot prices hit the historical high of Rs305 a kg for MG 1 and Rs295 a kg for ungarbled on good buying support amid limited supply.

Reports of a supply squeeze in the world market, at present, coupled with firmer markets in other origins seems to have influenced the primary market dealers and growers to hold back their stocks.

At the same time, many of the overseas buyers who had been postponing their coverage or buying only hand to mouth hoping the prices would decline once the Vietnam and Indonesian crops hit the market, will have to enter the market to cover for their requirements now as their wait has turned out to be futile, the trade claimed. More over, many have not been maintaining any inventory because of the high prices prevailing for long.

Domestic demand in India is also expected to pick up in the coming days as the festival is round the corner.

Meanwhile, according to reports from overseas, Vietnam is said to have finished its current crop while remaining harvesting in Indonesia would commence only after the Ramzan month. If the earlier projections are turned out to be true then the Indonesian crop is likely to be less, market sources told Business Line. Brazil which have been offering at lower levels recently is said to have started holding back and raised its B Asta prices, they said.

Thus, the overall scenario indicates of a hot pepper market in the coming days, the sources claimed.

The futures market was highly volatile with the prices shooting up last week. All contracts showed a substantial rise.

Aug contract matured. September, October and November contracts increased by Rs1,955, Rs2,068, Rs2,043 respectively to close at the weekend at Rs32,403, Rs32,852 and Rs33,104 a quintal.

Total turn over increased by 3,621 tonnes to 48,933 tonnes. Total open interest dropped by 397 tonnes to 10,895 tonnes.

Spot prices shot up to the historic levels on Saturday of Rs29,500 (ungarbled) and Rs30,500 (MG 1) a quintal.

Indian parity in the international market was competitive at $7,250 - $7,300 a tonne (c&f). As all other origins are ruling high including Brazil, which is said to be offering B Asta at $7,000 with ETO treatment in the US, there is a potential for some business coming for MG1, they said.


An overseas report said pepper remained highly volatile in the US markets with “financial restraints playing a major role in pepper purchasing. Future shipments are in demand but sellers are reluctant to offer past October shipment”.

The market was firmer and prices increased further last week, according to the International Pepper Community (IPC). In Kochi, the local market was more active as indicated by the increase in the volume of trade in the Commodity Exchange. Price increase was in the range of 4- 6 per cent.

In Lampung, pepper harvest is almost completed, with less quantity. Although local price increased almost daily, the trade remained calm due to limited material entering the market.

More significant price increase was recorded in the local price of Vietnam. The price increase was from VND 115,000 per kg at the beginning of the week to VND 1,22,000 at the week’s close. However, the fob price was stable.

In Sarawak, local price increased by 3 per cent and a slight increase was recorded in fob at the last week’s close. Marginal increase of local price also recorded in Sri Lanka.


The market for white pepper experienced some changes. In Bangka and Sarawak, local prices

increased by 2 and 5 per cent respectively, while in fob the increase was only 1 per cent. In China, the prices increased by 2 per cent both in local and fob. In Vietnam, the white pepper prices were reported stable.


During January – June 2011 export of pepper from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was 1,23,000 tonnes, registering a decline of 3 per cent from that of the corresponding period last year of 1,26,000 tonnes, according to the IPC.


(This article was published on August 21, 2011)
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