Malabar pepper falls sharply on bearish activities

Indian pepper fell sharply last week on bearish activities despite being the cheapest in the world market, at present.

It seems to have become a fact now that nearly 90 per cent of the Indian pepper market activities are concentrated on the exchange platform and it is controlled by operators, who are guided by “so-called expert analysts”. Consequently, there has been a continuous circular trading, trade sources alleged.

There is a tight supply position prevailing here as no pepper is arriving from the primary markets and the growers. Overseas buyers interested in MG1 are reportedly keeping away from buying because of the declining trend and the high volatility in the market. Meanwhile, price of the commodity from all the other origins including Brazil is ruling above the Indian parity.

Exporters are, said to be afraid of quoting because of the high fluctuations in the futures market on the one hand and the currency on the other. Added to this, there is a supply squeeze. Therefore, some of the exporters were said to be buying against firm orders from the overseas buyers. But, of late, because of the declining trend here the buyers have moved away and are on a wait-and-watch mode, the trade said.

Ever since more buyers surfaced on the exchange platform the investors, who are holding validity expired and farm grade pepper, are said to be holding back. Exporters and processors are also out to cover but the availability is said to be very much limited. An estimated 5,200 tonnes of valid stocks of November contract are with the exchange and of which a few hundreds of tonnes of pepper might come up for delivery on maturity.

Northeast monsoon has already set in the growing regions of the country and it is expected to delay the harvesting and consequently the arrival of new crop. The coming crop is also estimated to be less than that of the previous season. Thus, the availability is likely to be tight in India and similar situation is expected in some of the other origins also. Demand, on the other hand, is on the rise following increase in per capita consumption world over. All the contracts last week fell sharply with Nov, Dec and Jan dropping by Rs 1,695, Rs 1,575 and Rs 1,615 respectively a quintal to close at Rs 33,850, Rs 34,300 and Rs 34,640 a quintal.

Total turn over during the week rose by 6,193 tonnes to end at 35,241 tonnes. Total open interest moved up by 923 tonnes during the week and closed at 12,400 tonnes.

Spot prices dropped sharply by Rs 1,300 a quintal during the week despite tight availability and amid good buying interest just in tandem with the futures market trend. On Saturday ungarbled and garbled were closed at Rs 32,800 and Rs 34,300 a quintal.

US PEPPER IMPORTS

India was the largest supplier of ground pepper during Jan-Aug, contributing 3,462 tonnes (44 per cent) to the US' imports followed by Vietnam 2,236 tonnes (29 per cent).

During the same period, total import of pepper into the United States was reportedly at 46,799 tonnes, slightly higher by 322 tonnes imported in the same period last year. Import of black pepper increased, while that of white and ground pepper, showed a decline in 2010.

During 2010, US imports stood at 70,470 tonnes, comprising 52,010 tonnes of black, 5,850 tonnes of white and 12,610 tonnes of ground pepper, as against 65,855 tonnes (49,148 tonnes of black, 6,289 tonnes of white and 10,419 tonnes of ground pepper) in 2009. Import in 2010 was recorded the highest so far.

Indonesia remained the major supplier of black pepper to the US market, shipping out 15,555 tonnes, followed by Vietnam (8,619 tonnes), Brazil (6,985 tonnes) and India (3,523 tonnes). Indonesia, also the most important source for white pepper, was followed closely by Vietnam. These two countries supplied more than 90 per cent of white pepper imported by the US.

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