Commodities

Pepper market buoyant on buying support

| Updated on: Apr 24, 2011
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Pepper market has been buoyant last week as the buyers were active while supply remained below the demand.

However, the futures market as usual witnessed high volatility during the week as both the bull and bear operators were pushing it up and down.

The firmer trend in Vietnam, of late, has also aided the price rise. Earlier in the week there were reports of easier Vietnam market attributing it to rise in arrivals. But, the situation changed in a couple of days and the market moved up again on a reported squeezed supply.

Gulf-based operators were also reportedly active in pushing the markets up and they were allegedly finding the Indian futures market the easy target. “International players have entered the pepper market and are keeping the Indian futures market on fire so that all other origins would remain under its influence”, market sources said.

When one overseas report has floated a projection of 1.10 lakh tonnes (lt) of new crop in Vietnam another came out by projecting 1.25-1.3 lt. Thus, conflicting reports are spread in the market. Vietnam also reported to have exported around 25 per cent of its produce. The carry over stock from the previous crop is also said to be thin. Meanwhile, good demand from West Asia and China is also reportedly there for Vietnam pepper, a report said.

Likely mismatch

At the same time, another report forecast 10 per cent drop in Lampong crop while the next crop in Brazil is also predicted to be lower. Availability in India is also said to be limited. If all these projections and predictions were turned out to be true then there is a likely mismatch between demand and supply making the former outweighing the latter and consequently the prices might remain firmer this year.

At the last weekend Vietnam price of 500 GL increased to $5,500 a tonne (f.o.b) HCMC from $5,100-5,150 a tonne earlier in the week.

Buyers who have been postponing buying anticipating drop in prices with the arrival of new Vietnam crop will have to cover now to meet their commitments.

In the domestic market here also the industry has to cover before monsoon for packing and this could push up the demand in the coming days.

All the contracts on the exchange last week moved up substantially. May, June and July were up by Rs 917, Rs 930 and Rs 928 respectively to close at Rs 27,847, Rs 28,335 and Rs 28,853 a quintal.

Published on April 24, 2011

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