Pepper market remains hot on supply woes, bullish sentiments

The pepper market remained hot in all the origins on a squeeze in supply caused by various factors, such as unfavourable weather conditions during harvesting and good buying by China from Vietnam, limited availability in Brazil, Indonesia and India.

As a result, the prices of black pepper in the world market have moved up by about 8 – 9 per cent from that of the previous week, overseas reports claimed.

Farmers and primary market dealers in India are not reportedly releasing material, except for some sales taking place in Karnataka. Sellers there were offering at Rs 233- Rs235 a kg anywhere in India.

Validity expired stocks held by investors were being processed by expert processors and deposited back in the warehouses. Some are said to be holding farm grade pepper also. Activities on the spot market remained limited for want of supply.

Those who were postponing their purchases on the hope that the prices would decline once harvesting of new crop began in Vietnam said to have realized now that they had missed the bus and started covering now. This phenomenon has also aided the upsurge in the market, market sources told Business Line.

International operators based in Dubai are reported to have covered good quantity from Vietnam have been keeping the market bullish and under their influence and support Indian operators are also said to have been highly bullish. Expert analysts of national level major brokers and local recognized brokers were making predictions based on their 'graphs and charts' in bullish tone, they said. Consequently, the Indian parity has gone up to $5,850 a tonne (c&f).

The market observers expressed the view that even at this rate the material could be sold on the exchange platform here. The domestic demand is also expected to pick up in the coming days, they said.

All the contracts on the NCDEX shot up during the week. April, May and June increased by Rs936, Rs1,012 and Rs960 respectively to close on Saturday at Rs25,424, Rs25,800 and Rs26,107 a quintal.

Total turn over during the week increased by 15,087 tonnes to close at 96,292 tonnes. Total open interest went up by 1,527 tonnes showing good additional purchases to close at 12,690 tonnes.

Spot prices in tandem with the futures market trend and limited supply shot up by Rs600 to close at Rs 23,500 (ungarbled) and Rs24,300 (MG 1) a quintal.

Overseas trend

An overseas report said Vietnam continued to remain firm with Chinese buying and continued upwards even when the Chinese finished their purchasing. Multinationals and various Mideast/Asian/European markets continued in their stead. The local market moved from about 95,000VND from last week to an excess of 102,000VND at Friday trading close. “It is reported, that about half of the crop has been harvested. Farmers (much richer than years past), are holding stocks more than ever before. This, of course, is making the market much firmer than most consumers expected at this time of the year”.

The other origins are not offering much relief. India with a small crop is being driven by the bulls on exchanges and to a degree by domestic demand and some limited exports. Indonesia has been booking some quantities but reports of a very limited carryover stock of today prevails. Brasil pepper remains in strong hands and appears to move up by $50 a tonne after each trade.

Surely, this rapid pace of increase will cease but at what level remains the question and for how long. Two psychological barriers were broken this week. The first,was the fact that ground black Asta pepper traded repeatedly over the $3.00/lb mark and the second that Vietnam traded locally in excess of 100,000VND. These figures represent a very important benchmark for both the buyer's and seller's psychology, the report said. White pepper has been generally quiet with less of an increase than black during this period. “We can surely expect white to play catch-up very soon with black pepper”.

The price of pepper at sources continued to firm up, with the exception of Sri Lanka, International Pepper Community (IPC) said. In India, local trading at the Commodity Exchange improved marginally and prices increased by around 4 per cent. Local price of ungarbled black increased from INR 22,100 per 100 kg last week to INR 23,000 this week. Fob prices also increased by around

$200 per tonne and touched to $5,375. Significant increase was recorded in Vietnam. Fob prices of black pepper increased by 10 per cent and reached $4,550 per tonne for black 500g/l and 11 per cent to $4,950 for 550g/l this week.

Average local price at HCMC increased by 2 per cent to VND 90,500 per kg. In Lampung, wet weather condition which is expected to influence the upcoming crop was reported. Local prices in Lampung increased from IDR 37,000 per kg to IDR 38,500 this week. Pepper prices in Sarawak increased marginally by 1 per cent.

In Brazil, local price of black pepper was stable at BRL 7.75 per kg. In Dollar terms the price increased by 1 per. Fob prices of Brazil’s ASTA quality increased from $5,250 to $5,500 on Thursday, 31 March 2011.

WHITE PEPPER

Local prices of white pepper were relatively stable at most origins, with the exception of Bangka. The local prices of white pepper in Bangka increased by 3 per cent. Except in Hainan fob prices of white pepper increased by 2 per cent.

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