Pepper market last week declined on bearish activities and consequent such sentiments. However, the market was allegedly going against the fundamentals evident from the increase in the open interest last week, the trade said.

Activities were limited compared with the previous week. Open interest showed an increase indicating additional purchases and yet the market dropped.

Despite buying interest amid limited supply, spot prices dropped.

Availability in Kerala and Karnataka continued to remain tight and yet prices declined.

In the overseas markets, although there is propaganda of increased availability this year and a possible fall in prices, it has not only not dropped but remained steady to firm so far.

On the other hand, in the Indian domestic market end-users, including the “pappad” industry which uses high bulk density pepper, who have been buying only the required amount so as not to keep any inventory because of the high prices, are reportedly out in the market to cover now to complete their processing and packing before the onset of monsoon in North India. The availability in India, at present, is mainly on the exchange platform where some big parties have already covered large quantities.

According to Mr S. Kannan, Executive Director, International Pepper Community (IPC), total exports during January 2012 were at 1,01,462 tonnes as against 1,09,476 tonnes in the corresponding period in 2011. The revised projection for exports in 2012 is at 2,48,500 tonnes leaving balance of 1,47,038 tonnes to be exported from during the remaining period of the year June to December 2012, he said. Total production during the current year is estimated at 3,20,100 tonnes as against 2,98,400 tonnes last year. “Buyers in the international market have been waiting for increased arrivals from Vietnam and Indonesia. The harvesting in Vietnam has completed, with a slight increase in production over the last year; but there will not be surge in arrivals in Vietnam, because pepper farmers are watching the daily price movements and willing to hold back, if the price is declining. Hence the supply situation in the world market will remain tight,” he told Business Line from Jakarta.

“In India, despite a correction in the last few days and in July/August contracts, the price is expected to increase, due to drop in supply and higher demand from institutional buyers. Strengthening rupee against dollar expected and better holding power of Vietnamese farmers will also increase the price level,” he said.

“Vietnam has, so far, reportedly exported about 58,000 mt of pepper.

Surging prices on the global market has enabled Vietnam exports to increase 6 per cent in volume and 36 per cent in value during the first five months of this year, he said.

During last week all the active contracts on the NCDEX showed a decline, albeit marginal, July, August and September dropped by Rs 690, Rs 355 and Rs 45 respectively to the last traded prices of Rs 40,650, Rs 41,020 and Rs 41,375 a quintal.

Total turnover last week decreased by 1,994 tonnes to close at 10,250 tonnes. Total open interest increased by 230 tonnes to 4,077 tonnes.

Spot prices fell in tandem with the futures market trend by Rs 400 a quintal to close at Rs 38,400 (ungarbled) and Rs 39,900 (garbled) a quintal.

Indian parity in the international market was at around $7,450 a tonne (c&f) for Europe and $7,750 a tonne (c&f) for the US.

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