Pepper futures is giving the impression that it is running completely against the fundamentals and in the hands of operators who are, in fact, playing with the market to their whims and fancies.

The market drops when there is increase in open interest/additional buying and moves up when there is decline in the open interest and so on.

The farmers and dealers are said to be not interested and as a result spot pepper was not available. Some had to buy futures against their commitments.

Domestic market also reportedly needs coverage and “dabba trading in bucket shops” are going in north India, market sources told Business Line.

Competitive Indian parity on the one hand and some supply squeeze in the market on the other is likely to bring in some business from overseas.

“Some demand is cropping up”, they said. But, the slow work at the Kochi port is a cause for concern and “overseas buyers are upset over this problem as it would affect negatively the delivery schedule”, they said.

Add to this, the March-April “badla” is higher and hence the exporters are reluctant to sell because of the delay in moving the cargo out from the port, they said.

Trading at the terminal market has been very thin as the material was being moved out from the primary markets directly and afloat business was taking place rampantly, the trade said.

Tightening of the borders by the Sales Tax department in Kerala has forced some to bring the goods to the terminal market, they said.

The market has been highly volatile with the prices moving up and down consequent to the ‘tug of war' between the bull and bear operators.

One can witness the bears becoming bulls and vice versa in the market, they alleged.

Last week market showed a mixed trend with marginal ups and down at the weekend close.

March contract declined by Rs 67 a quintal to Rs 22,354 while April and May moved up marginally by Rs 35 and Rs 11 respectively to Rs 22,821 and Rs 23,035 a quintal.

Total turnover increased by 13,043 tonnes to 52,217 tonnes.

Total open interest and went up by 531 tonnes to 13,927 tonnes. And yet, spot prices dropped by Rs 100 during the week to Rs 21,700 (ungarbled) and Rs 22,500 (MG 1) a quintal at the weekend.

Indian parity in the international market was at $5,175 a tonne (c&f) and remained very much in line with other origins and therefore some business may take place, export sources indicated.

Overseas scenario

According to the International Pepper Community (IPC) in the beginning of last week, price of ungarbled Malabar black pepper in local market decreased from the previous week's close.

The price then increased daily and reached Rs 21,900 for 100 kg on Thursday from Rs 21,500 on Monday.

On an average however, the price was still lower by 1 per cent from previous week's average.

Trading activity on the Commodity Exchange was relatively calm with a slight improvement.

This was reported due to the lack of fresh triggers of export market.

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