Pepper turns hot on good demand amid tight supply

The pepper market shot up Tuesday on bullish activities based on reports of tight supply and firmer markets overseas.

As usual the market was highly volatile. It opened on a slow note with minimum volatility and dropped to the lowest price and continued to fluctuate mildly to rise sharply to touch the ceiling and then showed high volatility pushing the price up by Rs 1,000 a quintal and pulling it down to Rs 640 in the last 30 minutes of the closing session. The tug-of-war between both the groups was intense and eventually the bull operators had the upper hand and all contracts ended much above the previous day's closing.

There was good switching over from October to November and total open interest was negligible up by just 9 tonnes.

The turnover went up by 264 per cent indicating that there was only circular trading as part of the tug-of-war, market sources told Business Line .

“Because of the high volatility and consequent uncertainty in the prices coupled with the high fluctuations in the currency rates, exporters said they were afraid of quoting any price to their overseas buyers.” Nobody wants to sell and, they said, exporters would buy only against firm interest from the buyers.

Now 13 days are left for maturity of the October delivery and 5,578 tonnes of pepper are available on the exchange.

October contract increased by Rs 415 to close at Rs 36,000 a quintal; November and December shot up by Rs 640 and Rs 765, respectively, to close at Rs 36,810 and Rs 37,305 a quintal.

Total turnover

Total turnover soared by 8,369 tonnes to close at 11,536 tonnes. Total open interest moved up by 9 tonnes to 11,627 tonnes.

October open interest dropped by 751 tonnes to 5,578 tonnes, while November increased by 766 tonnes to 5,320 tonnes, showing good switching over. December open interest declined by 16 tonnes to 598 tonnes.

Spot prices on buying support amid limited supply increased by Rs 300 to close at Rs 33,300 (ungarbled) and Rs 34,800 (MG 1) a quintal. Few lots were traded on the spot. Growers and primary market dealers were reportedly not keen to sell.

Indian parity in the international market was at $7,800 a tonne (c&f) for Europe and $8,100 a tonne (c&f) for the USA and remained the cheapest, they said.

Overseas trend

According to an overseas report today, Vietnam prices were steady with quotes for FAQ 500 G/L at $ 7,700 a tonne (fob) HCMC, FAQ 550 G/L at $8,050-$8,075 (fob) and white double washed at $11,050 a tonne (fob) HCMC.

Lampong ASTA $8,450 a tonne (fob) Octovber/November shipment.

From re-sellers : Sarawak Black Pepper ‘ Black Label' ( min 500/520 G/L )$ 7,850 a tonne (fob) Singapore. Sarawak White pepper ‘Blue Label' $11,250 a tonne (fob) Singapore

Muntok White pepper – Local prices 90,000 IDR and up with only small supplies at these levels .

Nominally MWP should be around $11,200 (fob).

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