The year that passed by was a rejoicing one for the pepper growers in the country and the prices still continued to be ruling at higher levels on tight availability. Even last week markets remained by and large steady with marginal variations.

This year also the growers will have some thing to cheer about as the output is projected to be less. Of late, the upcountry demand has showed an upsurge but it was met by purchases by inter-State dealers directly from the primary markets through their agents.

Delay in movement of the material by trucks due to foggy weather in north Indian states has compelled many to dispatch pepper by rail on cash-and-carry basis, also allegedly by evading tax. Tamil Nadu-based inter-State dealers were buying through their agents fresh pepper at Rs 490-495 a kg.

But, arrivals continued to remain thin so far sending out the indication that the output would be less as projected by the official sources earlier. This phenomenon has aided the prices to stay above Rs 500 for both garbled and non-garbled.

The pepper prices hit the highest ever levels in 2013 because of the demand-supply mismatch in India and the world market. Spot prices last weekend remained at Rs 50,100 (ungarbled) and Rs 52,100 (garbled) a quintal down by Rs 100 from the previous Saturday.

In 2014 also the Indian markets are expected to remain firmer in the first quarter. Indian production in 2014 is estimated at 45,000 tonnes against a projected domestic consumption of 48,300 tonnes.

The stock brought forward from last year is estimated to be below 10,000 tonnes. Thus, the availability is likely to be much less in 2014, keeping the prices firmer. Indian production in 2013 is estimated at 58,000 tonnes.

Indian exports during April-September 2013 stood at 10,200 tonnes valued at Rs 423 crore at the unit value of Rs 414.71 a kg. Whereas, it was at 7,515 tonnes valued at Rs 309.6 crore at the unit value of Rs 411.98 a kg during the first six months of 2012-13.

Meanwhile, local arms of multinational companies were allegedly making propaganda that the investors stocks held in the warehouses would be released by the food safety authorities and that would be available for sale in the market. This move is aimed at pushing the prices down, they claimed.

Fall in prices coupled with weakening of the rupee pushed the Indian export price to $8,600 cf Europe and $8,850 tonne cf for the US. However, an overseas report said MG1 eto treated based on the exchange/physical is quoted around $9,150-9,250.

However, “material that is being released from the reprocessed ‘Oil dressed’ stocks might be as low as $8,300-75. But, how much is available and how it will be released remains to be seen.

In the overseas markets all buyers are expected to return from holidays on Monday and “only then we will be able to fully gauge the market.

Chinese New Year holidays to begin from January 28 in Vietnam and Vietnam farmers are anxious to take advantage of high prices and the need for cash for the holidays”, the report said. In Brazil southern crop is being harvested now in Espirito Santos which is expected to be 3000 tonnes and is being sold limited quantities below $8,000 a tonne cf Baltimore.

World Pepper Situation

According to the International Pepper Community (IPC), a decrease in production by 6,300 tonnes is likely in 2014, due to anticipated drastic fall of production in India. Besides, the domestic consumption is expected to be higher than last year.

“As a result, export and stock carryover would be lower. Under this scenario, the price is expected to remain high till the new crop from Vietnam arrives the market,” S. Kannan, Executive Director, IPC, told Business Line from Jakarta.

(This article was published on January 5, 2014)
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