Pepper hots up on strong demand amid tight supply

Pepper continued its upward run on Wednesday with both futures and spot prices scaling new heights on strong demand amid squeezed supply.

Spot prices shot up further by Rs 300 a quintal to touch Rs 33,300 (ungarbled) and Rs 34,800 (MG 1) a quintal.

Volatile

The market witnessed high volatility.

It touched the lowest price in the opening session itself and recovered to move up in the forenoon and that level continued in the afternoon with high volatility and touched the highest price of the day in the closing session and then slid and ended above the previous day closing.

The West Asia-based operators were reportedly covering actively and aggressively FAQ 500 GL unclean pepper at $7,700 a tonne, to meet their requirement which they were said to be meeting by supplies from Vietnam. Since it was not available, they have turned to India and their local arms were covering some physical pepper and lower farm grade pepper, market sources told Business Line.

There was a limited demand for MG 1 from the US buyers, they said.

As all the primary markets were closed today on account of Sree Narayana Guru Samadhi, no trading took place and the turnover showed a decline.

All the contracts on the exchange also increased substantially on reports of firmer prices in other origins and good demand for MG 1, they said.

Weather impact

On the other hand, unfavourable weather conditions in the growing areas are squeezing the supply further.

Oct contract on NCDEX went up Rs 395 to close at Rs 37,090 a quintal. Nov and Dec increased Rs 365 and Rs 410 respectively to close at Rs 37,650 and Rs 38,110.

Total turnover dropped 1,356 tonnes. Total open interest increased 145 tonnes on additional buying to end at 12,050 tonnes.

Oct open interest moved up 57 tonnes to 10,275 tonnes while that of Nov and Dec went up 78 tonnes and 18 tonnes respectively to 1,327 tonnes and 351 tonnes.

Spot prices

Spot prices increased further by Rs 300 a quintal on strong demand and limited availability to close at Rs 33,300 (ungarbled) and Rs 34,800 (MG 1) a quintal.

Indian parity in the international market was at $8,100 a tonne (c&f) Europe and $8,300 a tonne (c&f) for the US.

Despite the rise in the futures market, MG 1 remained almost at previous levels following weakening of the rupee against the dollar, they said.

Overseas market

Because of the limited availability overseas markets continued to rule firm, an overseas report today said. However, no recent quotes were reported from the most competitive origin, Brazil, it said.

Black pepper c&f New York indications in dollar/tonne were: MG 1 Asta 8,375 -8,575; Lampong Asta 8,275–8,375; Vietnam Asta against firm order (afo), Brazil Asta 7,500–7,600 f.o.b. (last quoted); and spot MLSVB Asta 8,600 ex warehouse New York/New Jersey.

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