Pepper market world over remained hotter than ever.
Pepper market world over remained hotter than ever on strong demand amid limited availability with the predictions earlier this year at the Asta Conference that black pepper prices would cross Rs 7,000 a tonne and the white $10,000 a tonne have not only turned true, but it went a step further with the prices for black crossing $8,000 a tonne level while white $12,000 a tonne.
The prevailing situation is likely to continue till the year-end at least as the Nov/Dec buying has yet to take place in a scenario where demand clearly outstrips supply. It has reached such a stage that local arms of multinational companies and operators based in West Asia were covering lower grade material including spent pepper at higher levels. Many of these buyers who were meeting their requirements of lower grade pepper from Vietnam had turned to India when they faced drought in supply.
However, in the futures , prices are speculatively brought down by bear operators who had successfully pulled the market down on Friday and Saturday despite additional buying in the nearby position and no selling pressure on spot when the entire world markets were ruling firmer day by day. Indian parity was at $7,750–7,800 c&f Europe at $8,050-8,100 a tonne (c&f) for the US while all other origins were about $200 above the Indian parity.
October, November and December contracts have shown a rise during the week of Rs 550, Rs 550 and Rs 630 respectively to close at Rs 36,200, Rs 36,845 and Rs 37,325 a quintal.
Total turnover dropped by 2,377 tonnes to 45,965 tonnes, while total open interest moved up by 809 tonnes during the week.
Spot prices during the week increased by Rs 1,000 to close at Rs 33,000 (ungarbled) and Rs 34,500 (MG 1) a quintal at the weekend. However, spot pepper prices hit its historic level of Rs 33,400 (ungarbled) and Rs 34,900 (MG 1) during the last week.
As the material is available in India and MG 1 has become cheaper, overseas demand is pouring into the country and consequently exporters were running around to buy, but quality pepper was not available. Even 550 GL pepper was not available, market sources told Business Line.
Meanwhile, according to the revised estimates of the International Pepper Community, production for 2011 is lower by around 17,000 tonnes compared with the previous year. The estimated exports from producing countries during January-August 2011 is also lower by 10,000 tonnes compared with the same period of last year
This situation confirms that the reported carryover stock in the producing countries is getting reduced to the minimum level. “Pepper farmers and local traders may also find it difficult to keep more stocks at the current price level. However, consumption of pepper among the consuming countries is constantly growing without corresponding growth in global output,” Mr S. Kannan, Executive Director, International Pepper Community (IPC), told Business Line. The current level of world annual consumption is estimated at about 3,50,000 tonnes.
Black pepper prices jumped up in some sources this week, according to the IPC. In Brazil, India and Vietnam, the increase was much higher at 8 per cent locally, while in fob 3 per cent were recorded. Prices in Sri Lanka, Lampung and Sarawak also increased comparatively at lower rate. The higher local price increase was more than fob. In Vietnam local prices increased by VND 20,000/kg during the week from VND 141,000 last week to VND 161,000 at the week’s close, recording an increase of 9 per cent. In Brazil, local price was BRL 12/kg, increased from BRL 10.5 last week. In Lampung, local price increased from IDR 59,000/ kg last week to IDR 63,000 this week.