The pepper market remained highly volatile last week on the tug of war between the bull and bear operators. This was amid a potentially tight supply scenario given the reluctance shown by growers in Vietnam where harvesting of new crop is nearly complete.

Nearly 50 per cent of the crop is reported to have been shipped overseas and through cross border trade with China. Add to this, a good quantity of heavy pepper has been converted into white that has been fetching higher price. As all these sales at higher prices have swollen the Vietnam farmers' wallets, they are said to be no hurry to sell their current holding, lest it would bring down the prices.

Meanwhile, Indian growers having realised the market pulse, are holding back whatever stocks they have on hand till the prices touch Rs 300 a kg, trade sources said. The output is much less than the previous season while there has not been any drop in demand. In addition, summer rain, almost daily for about a week now, is also affecting supply. Domestic buyers, especially from the masala industry, who have been waiting for the prices to drop may have to cover now to complete their packing before the onset of the South-West monsoon, they said.

At the same time, overseas buyers who had been postponing their buying for several weeks hoping the prices would decline once the Vietnamese new crop hit the market now appears to have realised that they had missed the bus. They were not keeping inventory because of the high cost involved and hence buying only hand to mouth. As a result, there are buyers who have not covered fully and left with no other alternative but to buy now to meet their immediate requirements. The situation, thus, is appears to be heading towards a mismatch between demand and supply with the former outweighing the latter in the coming days.

The efforts of the bear operators to pull the market down do not seem to have worked as it was said to be against the fundamentals. At the same time most of the attempts were claimed to have boomeranged, market sources told Business Line .

The market continued to remain in the hands of speculators and that resulted in high fluctuations in the prices.

All the contracts on the NCDEX shot up during the week. May, June and July shot up by Rs 1,304, Rs 1,430 and Rs 1,503 respectively to close at Rs 29,151, Rs 29,765 and Rs 30,256 a quintal at the weekend close.

Total turn over shot up by 48,491 tonnes to end at 1,03,131 tonnes. Total open interest also increased by 2,247 tonnes during the week to close at 16,983 tonnes, indicating good additional purchases.

Availability on the spot is limited as the growers were not ready to part with their produce at the current levels. Hence, there has been no selling pressure. Consequently, the spot prices shot up by Rs 1,600 a quintal during the week to close at the highest ever record level of Rs 27,400 (ungarbled) and Rs 28,200 (MG 1) a quintal on Saturday.

Indian parity in the international market has gone up to around $6,800-6,900 a tonne (c&f) and was nearly competitive, they said.

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