Bearish sentiments pull pepper market down

Pepper market was in the bearish hands last week with all the contracts on the futures market falling sharply.

The difference in the prices between Nov and Dec created a good “badla” resulting in liquidation and switching over and that also led to bearish sentiments. Cued by the declining trend in the futures market here the Vietnam prices also showed a downward trend. But, the materials offered cheaper by Vietnam were of FAQ 500 GL and 550 GL black pepper.

Since the European markets are facing some problems due to the Euro-crisis were looking for cheap Vietnam pepper and the sellers were said to be finding it beneficial to dispose of the stocks left with them.

Certain overseas operators, who were reportedly used to buy from Vietnam the cheap FAQ material, were also allegedly behind the bearish market in India. They were said to be interested either to buy at lower rates from here or to influence the Vietnam market to drop by bringing down the prices in India.

Anyway the material available now in India is mainly on the exchange platform and that is said to be of validity expired and farm grade pepper.

On the spot there were no sellers at the current rates as the materials are held in strong farmers' hands who could afford to hold for long. Similarly, primary market dealers were also not interested to sell. Therefore, no selling pressure was seen in the spot market. Continuous decline in recent weeks has driven away the buyers also.

In fact, the fall in the futures market has made the Asta grade Malabar Garbled 1 pepper the most competitive in the world market at $7,200-$7,250 a tonne (c&f) for Europe and $7,500-7,550 a tonne (c&f) for the US. Some origin specific selective buyers were, however, showing interest to cover from India. Prices of Indonesia and Brazil were not influenced much by the downward trend in the Indian futures market as in the case of Vietnam, market sources told Business Line .

The northeast monsoon has already commenced in the growing areas and it is likely to slow down the harvesting in Kerala's southern districts where from normally the first pepper of the season hits the market. The growers have expressed their displeasure on the continuous fall in the prices, of late, despite firm overseas markets.

Nov, Dec and Jan contracts on the NCDEX fell by Rs 1,250, Rs 945 and Rs 735 respectively to close at Rs 32,625, Rs 33,365 and Rs 33,880 a quintal.

Total turn over fell by 5,618 tonnes during last week to end at 29,623 tonnes. Total open interest also fell by 1,220 tonnes to close at 11,180 tonnes showing good liquidation and switching over.

Spot prices were notionally brought down by Rs 600 a quintal in tandem with the futures market trend to close at Rs 32,200 and Rs 33,700 a quintal.

Overseas market trend

The black pepper market according to the International Pepper Community (IPC) showed a bearish trend with prices decreasing in most origins.

In India, trading was sluggish as indicated by volume of trade in the Commodity Exchange. Prices in Kochi decreased locally as well as fob. Local prices of Malabar ungarbled decreased from Rs 33,300 for 100 kg in the last week to Rs 32,200 at this week's close. In Dollar terms however, local prices increased marginally, due to strengthening of Rupee against Dollar.

Price decrease up to 4 per cent in local market was recorded in Vietnam and Lampung, In Brazil and Sarawak the local price decreased by 3 and 2 per cent respectively. A marginal increase of local price was recorded in Sri Lanka.

WHITE PEPPER

Market for white pepper also experienced a bearish trend. In Bangka, white pepper price decreased by 1 per cent. In Vietnam it decreased by 2 per cent locally, but reported stable in f.o.b. Sarawak white pepper also decreased marginally.

PEPPER IMPORTS BY GERMANY

During January - August 2011, total import of pepper by Germany was 16,583 tonnes (15,469 tonnes of whole pepper and 1,114 tonnes of ground pepper), recording a decrease of 12 per cent, compared to imports of 18,915 tonnes (17,829 tonnes of whole and 1,088 tonnes of ground pepper) in the corresponding period last year.

Import of ground pepper however, showed an increase of two per cent. Major share of pepper imported into Germany was from Vietnam, supplying 7,816 tonnes of whole pepper (51per cent) during the eight months of this year. Brazil and Indonesia followed the second and third important origins for Germany, supplying 3,685 tonnes and 1,747 tonnes of whole pepper respectively. Ground pepper was mainly imported from Netherlands (29 per cent), France (20 per cent) and Vietnam (15 per cent). India does not figure in the imports of pepper by Germany.

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