Pepper prices continued to stay hot last week with both the futures and the spot surging ahead with the latter hitting the historic high of Rs 429 (ungarbled) and Rs 449 (garbled) a kg at Sunday closing.

Tight availability at a time when there is strong domestic demand and firmer markets in other origins has kept the prices surging, market sources told Business Line .

Industrial end users, who were covering only hand to mouth hoping that the prices would fall when the estimated 6,800 tonnes of pepper held in the warehouses for months are released, have started covering from all available sources.

The festival and winter demand has started picking up. Consumer markets in north India are also said to have no inventories and hence they are now out buying even directly from the primary markets wherever available.

Traders and expert processors who have sold out their stocks were also claimed to be covering back. Thus, there has emerged a strong demand.

The projections by domestic and overseas agencies about the Indian crop in 2013 appear to be much exaggerated when one goes by the supply trend so far.

A similar situation has, of late, emerged in other origins also. Vietnam prices have gone up while Indonesia was not a seller last week.

Thus, there is reported to be a supply crunch. The only source of availability is Brazil at present. It was, however, slightly cheaper.

Given the current global scenario there is a possibility of some demand coming to India for Malabar. But, the trade allege that there is no material to offer. At the same time the new crop is around the corner.

Already, green berries have started arriving from the southern districts of Kerala and that is bought by the pepper in brine manufacturing units. If the entire 6,800 tonnes of pepper are released after the new crop hitting the market in the coming months that might impact the prices in the coming season, they alleged. All the active contracts on both the national exchange and the IPSTA increased last week. Nov and Dec contracts on the NMCE increased by Rs 905 and Rs 1,116 respectively to Rs 45,703 and Rs 44,900 a quintal. On the IPSTA, they were at Rs 45,703 and Rs 45,500 respectively up by Rs 1,003 and Rs 1,174 during the week.

Spot prices shot up last week Rs 1,400 to touch the historic high of Rs 42,900 (ungarbled) and Rs 44,900 (garbled) on strong demand amid tight supply. In the international markets, pepper continued to stay very firm.

India, especially between stronger rupee and local demand, MG 1 was around $7,950 (c&f).

Overseas trend

Indonesia was holding steady at $7,825-7,935 (c&f). Brazil was also firmer and sellers were reportedly more reluctant. B Asta was quoted at $7,175-7,225 (fob).

Vietnam was steadier with cheapest seller for V Asta at $7,825 - 7,875 a tonne (c&f).

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