If the projections about the output in all producing countries are turned out to be true, one could come to the conjecture that there is going to be a shortfall in availability this year, and in that case the current price decline might turn out to be a temporary phenomenon.

However, much will depend on the factual position so far as output and availability is concerned as, if one goes by the past experience, the projections and actual availability were never tallied. The output often remained much above the projections. Given this scenario the market becomes highly speculative and volatile without having any co-relation with the fundamentals.

The futures market has, of late, become the platform for exhibiting the money and muscle power of both the bull and bear operators. In the tug of war between these two parties the market is pushed up and pulled down frequently and sharply. In that process, the medium and small players are sandwiched. The recently introduced additional margin has aggravated the situation for them further with the result many of them had been wiped out, market sources alleged.

Though there has been an easier trend in other origins in recent days, the price for Asta grade pepper did not drop below $6,000 a tonne. Even some of the Vietnamese growers were quoted as saying that the foreign processing companies based in their country were under invoicing so as to create the impression that Vietnam prices were falling. Indonesia and Brazil were also quoting above $6,000 a tonne.

Indian parity, however, when calculated on the futures market June delivery price, was at above $6,600 a tonne and remained much above the other origins. But, when calculated on the basis of the Karnataka pepper price at Rs 265 a kg the parity would become competitive with other origins. Therefore, some export business might take place directly from Karnataka-based planter/exporters, market sources told Business Line.

Offering at Rs265 a kg anywhere in India by the Karnataka growers has attracted the upcountry buyers to the state and much of the domestic demand is met by it.

There was some selling pressure from the high ranges/Wayanad and plains of Kerala because the growers were needing money for the school/college admissions. These factors have resulted in the spot prices dropping during the week.

However, the projected drop in output coupled with the rainy conditions prevailing in the growing regions might lead to a squeeze in availability in the coming days paving the way for a price rise. But, it will depend, by and large, on the money/muscle power of the operators who are controlling the market, they said. “Here the supply – demand criteria and market fundamentals often do not remain a determining factor”, they said.

Last week the market was down on bearish activities. June, July and August contracts declined by Rs35, Rs 342 and Rs 351 respectively to close at Rs29,190, Rs28,824 and Rs28,913 a quintal.

Total turn over fell by 20,774 tonnes to 39,996 tonnes while total open interest dropped by 836 tonnes to 14,159 tonnes.

Spot prices on selling pressure dropped by Rs400 during the week to close at Rs27,100 (ungarbled) and Rs 27,900 (MG 1) a quintal.

Indian parity in the international market was at around $6,700 a tonne (c&f) and remained out priced.

Global trend

The black pepper market in general, according to the International Pepper Community (IPC) was quiet and mixed response during the week.

Prices in India, Lampung and Vietnam decreased during the week, following low demand from overseas markets. In Sarawak and Sri Lanka, prices increased further.

The price decrease is likely to be a short term phenomenon, as drop in production this year is anticipated by many agencies in producing countries. Although a small unexpected crop was harvested in April, crop in Lampung is also estimated to be poor. In India, the market was volatile during the last few weeks.

Some operators are reportedly watching development without much activity. Trading at the Commodity Exchange decreased during the week and futures prices decreased by 2 per cent from last week.

In Lampung local price decreased substantially by 8 per cent with very limited activity. In Vietnam local price was at the level of around VND 102,000 per kg, registering a slight fall of 1 per cent; but in fob price 10 per cent increase was recorded.

In Sarawak, local price increased marginally, while in fob, the price was stable. In Sri Lanka, pepper price at growing areas increased by1 per cent.

WHITE PEPPER

The market for white pepper also showed a mixed response. In Bangka, prices decreased marginally, while in Sarawak increased by 3 per cent locally and 1 per cent in fob. In Vietnam, white pepper prices were reported stable.

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