Sharp fall in pepper futures

G.K. Nair Kochi | Updated on January 30, 2011 Published on January 30, 2011

A file picture of pepper kept for sale at a retail outlet.

Pepper market during the week has been bearish with all the futures contracts falling sharply. Consequently, the Indian parity remained at par with other origins. But, no demand came through from overseas as buyers were eagerly waiting for the Vietnam new crop to come pulling the prices down.

Meanwhile, there were reports that it was raining in Vietnam affecting the harvesting and post harvest processing of pepper. If the reports are true, then there may be a delay in arrivals of the new crop in the markets, trade sources told Business Line.

In India, the market is in the midst of the season and arrivals have started picking up but not to the normal levels. Demand currently outweighs the supply. But, there is anticipation of increased supply outstretching demand in the coming days and on this assumption, the market is falling at present, they said.

Arrivals of new pepper at the terminal market have been in small volumes. All the contracts on NCDEX showed a sharp decline during the week. February, March and April dropped by Rs 791, Rs 793 and Rs 788 respectively to close on Saturday at Rs 22,308, Rs 22,691 and Rs 23,031 a quintal. Total turnover dropped by 6,465 tonnes to 35,050 tonnes.

Total open interest fell by 1,769 tonnes to close at 11,107 tonnes, showing heavy liquidation during the week. Spot prices in tandem with the futures market trend dropped by Rs 400 to close at Rs 21,200 (un-garbled) and Rs 22,000 (MG 1) a quintal. Indian parity in the international market on Saturday remained at $5,150- 5,175 a tonne (c&f) and remained competitive with other origins.

IPC Report

According to the International Pepper Community (IPC), the black pepper market during the week is watching developments in India since pepper harvest is on-going there. Stock in the domestic market is adequate following the arrival of fresh crop.

From HCMC it was reported that local prices of pepper decreased by 2 per cent, but in Daklak, prices for raw material increased by VND 5,000 a kg to VND 85,000 this week. Fob price were stable as last week. In Lampung prices increased marginally, with meagre activity. In Sarawak and Sri Lanka, prices were relatively stable.

White pepper: The market for white pepper is still calm. Slight movement has taken place in Bangka. The market would be more active when Vietnamese crop arrive in to the market by March. In Bangka, white pepper prices increased by 4 per cent, due to immediate commitment. In Sarawak and Vietnam, stable prices were reported this week.

During 2010, Vietnam is estimated to have exported around 1,13,000 tonnes of pepper, comprising of 91,000 tonnes of black and 22,000 tonnes of white pepper, valued at around $403 million, as against 1,34,264 tonnes worth $348 million exported in 2009.

However, press reports said that Vietnam exported 1,16,000 tonnes of pepper valued at $419 million during 2010. The United States, Germany and United Arab Emirates were the main markets. They collectively absorbed around 37 per cent of Vietnamese pepper in 2010.

Other important markets were Netherlands, India, Russia, Pakistan, Egypt and United Kingdom absorbing around 25 per cent. Stock available in Vietnam is very limited just to meet commitment, until new crop comes to the market.

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Published on January 30, 2011
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