Pepper falls on bearish activities

Pepper market here does not seem to be driven by the market principles of demand and supply. It has been highly volatile consequent to a tug of war between the bull and bear operators and last week the latter had an upper hand and as a result the market fell during the week making the Indian pepper the cheapest in the world during the past few days.

It has happened at a time when all other origins were ruling firmer on a tight supply situation. On the spot market here also there was no selling pressure and a squeeze in availability of good quality material was visible. It is evident from the fact that spot prices did not fall in tandem with the downward trend in the futures market.

Pepper was available on the exchange platform. One of the reasons attributed to the bearish sentiments on the futures market was that Dubai-based operators who used to by low bulk density farm grade pepper from Vietnam had bought the lower grade material from India and it was being traded on the spot market there at below $7,000 a tonne. They also cater this pepper to the markets in the poor countries in Africa on credit. This phenomenon is claimed to have influenced the futures market.

However, on the spot there were no sellers as they were aware of the tight global supply situation and a possible rise in prices in the coming days. Incessant rains in recent weeks also created a negative impact on the next crop according to growers.

There was also said to be some slow down in buying by small and medium exporters who alleged that the port was congested due to arrival of large number of containers from inland depots without any corresponding rise in the vessels to clear them. This led to delay in shipments putting them in difficulties, they said. Indian pepper is placed at an advantageous position and this rare opportunity “should be fully exploited.” But, the tug of war on the market making prices to fluctuate wildly and the delay in shipping out the goods on time might deprive us of this golden opportunity,” they said.

The market witnessed sharp fall in all the contracts during the week. Oct, Nov and Dec dropped by Rs 1,095, Rs 1,070 and Rs 915 respectively during the week to end at Rs 35,210, Rs 35,850 and Rs 36,450 a quintal on Saturday.

Total turnover moved up by 10,125 tonnes to close at 54,843 tonnes. Total open interest dropped by 394 tonnes to 11,853 tonnes during the week.

Spot prices, however, declined by Rs 200 only to close at Rs 32,800 (ungarbled) and Rs 34,300 (MG 1) a quintal.

Indian parity in the international market at $7,800 a tonne (Europe) and $8,100 a tonne (c&f) for the US was the cheapest and hence orders were coming for MG 1, they said.

Overseas market trend

An overseas report Saturday said “the basic tightness of the market has not changed. Indonesia continues to watch the markets without much action as per previous weeks. Brazil quieted down but remains firm. Cash flow seems to be a major issue with many of the exporters.”

Prices quoted in the US markets in dollar per tonne were: India - MG1 eto'd 8275/8600 (c&f); Vietnam-Vasta 8525/8825 (c&f); Indonesia – Lasta 8525/8700 (c&f); Brasil - Basta $8000/8200 (fob).

White Pepper: Indonesia - MWP $11,500/11,900(c&f); Viet - DW$ 11,600/11,800 CF

NY Spot MSLV treated were at $8,750/$8,925 a tonne ex-warehouse

NY Spot MLSV untreated were at $8,600/$8,700 a tonne ex-warehouse

The market was nervous as price levels were high due to shortage in supply situation, a report from the International Pepper Community (IPC) said.

In Vietnam and India, local prices reacted downward this week. In fob however, prices remained high.

In Lampung, the local price stood at IDR 63,000 per kg this week. However, the average price of the week has increased by 3 per cent from last week's average, with very limited activity. Average price of black pepper in Brazil increased by 2 per cent locally and 4 per cent fob. A marginal price increase of 1 per cent was recorded in Kuching, Malaysia, while in Sri Lanka significant increase of 13 per cent was recorded this week.

WHITE PEPPER

After witnessing a significant price increase for white pepper in Bangka during last week, local prices stood at IDR 90,500 per kg this week. On an average however, the price increased by 3 per cent from last week.

In Vietnam, local price of white pepper decreased marginally by 1 per cent, while for fob it was higher by 1 per cent. Stable prices of white pepper were recorded in Sarawak, both for local and fob. It was reported that white pepper prices in Europe increased significantly by 13 per cent.

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