Pepper market last week witnessed high volatility resultant from the 'tug of war' between the bull and bear operators who are, of late, controlling the trade.

International operators, based outside India, are allegedly influencing the futures market here. While the bear operators were trying their best to pull the prices down and last week they were seem to have nearly succeeded in getting the market to slip marginally. There was liquidation.

However, spot prices remained firm as there were no sellers on the spot. Growers stayed away hoping the prices would touch Rs300 a kg cued by the current Vietnamese trend.

Supply from Vietnam continued to remain squeezed. Consequently, the prices there were firmer with 500 GL FAQ being offered at $5,790 a tonne and 550 GL at $6.090 a tonne (fob) HCMC on Apr 16.

While pepper double washed was being offered at $8,400 a tonne.

White pepper prices are also ruling very high owing to the short supply. For the farmers in Vietnam enjoying a very low processing cost conversion to white becomes more and more lucrative. Consequently, they are said to have been using the heavy pepper for making white pepper.

Indonesia and Brazil are said to be having not much black pepper to offer while the main source of the material, Vietnam, where harvesting is underway, does not seem to be interested to sell the material. Another source, albeit with limited quantity of pepper is India where it is available on the exchange platform, as the growers are said to be reluctant to release their produce.

All these factors give out the impression that things are not moving the way the buyers and sellers have been anticipating. Some kind of “disequilibrium” is there, market observers opined. “Otherwise, such a kind of scenario would not have emanated”, they claimed.

At the same time, Vietnam reported to have exported 25,128 tonnes during the first three months of 2011. Its exports to China were at 8,000 tonnes. Loss ratio for white pepper processing is estimated at 1,700 tonnes.

The prices are ruling very high and it is likely to move up further if the arrivals from Vietnam failed to pick up. Similarly, the shape of new crop in Indonesia which is going to be the supplier by mid-year is also not known. Consequently, the market is running purely on speculation and that gives enough room for the bull and bear operators, who are benefited.

The futures market in India at the weekend remained nearly steady. April contract declined marginally by Rs32 to close at Rs 26,265 a quintal. May and June moved up slightly by Rs 79 and Rs73 respectively during the week and closed at Rs 26,930 and Rs27,405 a quintal on Saturday.

Total turn over fell by 25,200 tonnes to close at 55,907 tonnes. Total open interest dropped by 488 tonnes, indicating liquidation, and closed at 13,940 tonnes.

Spot prices on good buying support amid limited supply increased by Rs300 to close at Rs25,000 (ungarbled) and Rs25,800 (MG 1) a quintal.

Domestic demand is said to be picking up and much of the demand of late is being met by supplies from Karnataka. Unfavourable weather conditions there are said to be affecting the supply, trade sources said.

Add to this, shortage of truck drivers are reportedly disrupting movement of consignments in recent weeks, they said. Holidays and elections last week also slowed down the trade. A similar situation is likely next week also on account of holidays, they said.

Indian parity in the international market is at around $6,300 - $6,400 a tonne (c&f) and remained competitive.

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