Commodities

Bullish sentiments, tight supply push up pepper

G K Nair Kochi | Updated on March 20, 2011

The pepper market during the week witnessed mixed trend with bullish sentiments taking the lead. At the same time firm prices in other origins indicate that there exists a tight supply situation, probably because of holding back by growers in India and Vietnam.

Highly remunerative prices for rubber, coffee and cashew are appear to have strengthened the hands of the Vietnamese growers who could now afford to hold back their pepper and release in a regulated manner so as to keep the prices at higher levels.

Meanwhile, exports from Indonesia in Jan and Feb 2011 showed a decline from that of the same period the previous year, indicating a probable tight availability.

Where as, in India the growers who had liquidated old stocks at good prices were replenishing their stocks and were not ready to part with their produce now, market sources told Business Line

Thus, there has not been any aggressive selling in India and Vietnam so far. However, there were some selling pressure in Kerala's Idukki and Wayanad, of late, to meet the primary market dealers'/growers' financial commitments because of the financial year closing, market sources said adding “it might last till the March-end”.

During the week there has been heavy liquidation in the futures market as the parties who had taken delivery of 2,500 tonnes in February were appeared to be weak and hence liquidated at thin margins, they said.

March position has gone for delivery whether those who took delivery would sell further or hold back is to be seen. Since it is valid stock there is a possibility that they might hold back. Exporters opted for delivery of March because it was valid and cheap, they said.

Indian parity in the international market was at $5,300 a tonne (c&f) and said to be competitive with other origins and hence some orders for Malabar is likely, they claimed. “Some overseas buyers are looking for Malabar and hence some buying is likely to come to India also”, they said.

Procedural delays coupled with delay in shipments due to alleged technical problems at the port are costing the exporters heavily, they said. Delay in shipments would fail the exporters in meeting their delivery schedule and that in turn would affect their credibility, the traders alleged.

Add to this is the high volatility in the futures market, resultant from the tug of war between the bulls and bears, which in turn has been pushing the buyers to sidelines.

April, May and June contracts during the week went up by Rs 633, Rs720 and Rs 687 respectively and closed at Rs 23,454, Rs 23,755 and Rs 24,030 a quintal on Saturday.

Total turn turn over during the week moved up by 5,728 tonnes to close at 57,945 tonnes. Net open interest dropped by 3,392 tonnes to close at 10,535 tonnes showing good liquidation during the week.

Spot prices in tandem with the futures market and some buying interest increased by Rs200 a quintal to close at Rs21,900 (ungarbled) and Rs22,700 (MG 1).

Overseas scenario

According to the International Pepper Community (IPC) the black pepper market focused on the development in India and Vietnam, since these two countries harvested their pepper in the first quarter. In India, the market was more active, particularly in the second half of the week. On Thursday, trade volume at the Commodity Exchange has experienced a significant movement, particularly for April contracts. Spot price of ungarbled black increased. In dollar terms however, the price was relatively stable, due to weakening of INR against the dollar.

There is no price reported from HCMC, Vietnam. In Daklak however, price of farm grade quality of black pepper increased by VND 1,000 per kg to VND 88,000 at the week’s close.

In Lampung, prices were stable with limited activity. Local price of Sarawak black was also stable at MYR 12.2 per kg. In dollar terms however, the local price was lower by 1 per cent, while fob prices of Sarawak increased by 1 per cent. In Sri Lanka, pepper prices at growing areas increased by 1 per cent.

WHITE PEPPER

Local pepper price in Bangka decreased further by 2 per cent. In the last few weeks, the decrease was influenced by strengthening of local currency against USD. This week, tsunami disaster in Japan which is anticipated to affect demand has been used to press pepper price. Price increases were reported in Sarawak and Hainan by 1 and 2 per cent respectively.

INDONESIAN EXPORTS DECLINE

In February 2011, Indonesia exported black pepper from Lampung at around 1,545 tonnes registering a continuous decrease from July, with the exception of export in November 2010, IPC said. The decrease reflected tight availability of material in Lampung. During January –February 2011, total exports from Lampung was 4,037 tonnes valued at $17.5 million.

In 2010, Indonesia exported around 48,000 tonnes of black pepper from Lampung valued at $170 million, registering a significant increase of 31 per cent in quantity from around 37,000 tonnes exported in 2009.

Published on March 20, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor