Agri Business

Pepper may rule firm till arrival of Vietnam crop

G K Nair Kochi | Updated on February 06, 2011 Published on February 06, 2011

kigkn pepper

Pepper market appears to remain firm in the coming days and is likely to stay so till the arrival of new Vietnam crop in the market in two to three weeks time. However, the futures market continued to remain highly fluctuating because of the ‘tug of war' between the bull and bear operators and as a result of which prices are likely to be unpredictable, market sources told Business Line.

The bears propagate that the new arrivals would pick up in the coming days and there won't be anybody to take delivery of February contract. Besides, as the new crop in Vietnam will start arriving in the international market after two weeks there won't be any demand for Indian pepper. Bulls spread the news that the crop is poor and arrivals have not yet picked up even after crossing the middle of the current season.

Availability at the exchange platform is also not much and there would be people to take delivery of February contract because of the tight supply position, they claim. Various other factors such as shortage of material, zero tax in Tamil Nadu, north Indian buyers not having accounts wanting to buy on “cash and carry” system also promote direct afloat sales, they said.

Shrinkage in area under pepper coupled with low productivity in Kerala led to sharp fall in output in recent years. The current strike at Kochi port is also affecting exporters badly. There are estimated to be 20-25 containers stuffed with pepper and other spices worth about Rs 10 crore held up at the port. By the time the shipping crisis is cleared and pepper gets shipped out, Vietnam's new crop will become available in the market, they said.

After high volatility during the week, the market closed above the previous weekend close. February, March and April contracts increased by Rs 546, Rs 403 and Rs 259 respectively to close at Rs 22,854, Rs 23,094 and Rs 23,389 a quintal. Total turnover during the week went up by 7,259 tonnes to close at 42,309 tonnes.

Total open interest also moved up by 2,696 tonnes to close at 13,803 tonnes showing good additional buying. Spot prices increased by Rs 500 on good buying support and in tandem with the futures market trend to close the weekend at Rs 21,700 (ungarbled) and Rs 22,500 a quintal. If spot prices ruled above Rs 200 a kg, small and medium farmers might come forward to sell as for them prices would be remunerative, trade sources said. Indian parity in the overseas market is at $ 5,175- 5,200 a tonne (c&f) and almost competitive with other origins, they said.

According to the overseas report, at present the black pepper market appears to have stuck to a “holding pattern”. India, Indonesia and Brazil continue to hold their levels steady, awaiting developments as well. There are conflicting sentiments about which direction the market will move once quantities are more freely available, with correspondingly different positions being taken.

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Published on February 06, 2011
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