Demand hope, tight supply lift black pepper

Tight supply conditions and expectations of a surge in demand lifted the prices in the black pepper market. Declining production in the traditionally-known centres has kept supplies low throughout this season.

Tight supply conditions and expectations of a surge in demand lifted the prices in the black pepper market. Declining production in the traditionally-known centres has kept supplies low throughout this season.

Traders said that the supplies from the relatively-new production centres in Karnataka have not kept pace with expectations. As a result, the arrivals into the terminal markets were lower and stood at less than 10 tonne per day on an average.

The market players are, therefore, covering from the supplies from the exchanges. For August contract, the exchange delivery stood at around 1,200 tonne.

Upcoming festival demand

Trade enquiries ahead of the festival season show that the domestic demand is likely to be higher this season. Traders have started stocking up pepper for the festivals as they expect prices to go up by at least 20-30 % during this period.

The bullish sentiment in the market is clear from the fact that even at `210/-kg plus, there are buyers for pepper. The players expect the prices to go up further. “But the problem is that we do not have enough supplies to meet the demand”, said a trader. Market is also alive with rumours that the operators have shifted from turmeric to pepper.

Exports not competitive

While expectations of a higher demand have kept the domestic market active, the country remained out priced in the international market. Though the offer prices of Indonesia and Vietnam have moved up in the past few days, the Indian prices are still higher.

Exporters said that they have not been able to ship out any major quantities in the past several weeks. The US inventory build up ahead of the winter season is expected to commence in the coming days.

At the same time, Vietnam surprised everyone by shipping nearly 12,000 tonne in July, said a trader. The market perception was that Vietnam had sold most of its stock.

Indonesia is also liquidating its stocks. Brazil’s crop is expected to hit the market in the next few days and would be cheaper compared to Indian variety. Some of the industry players said imports into the country are quite high.

Fluctuating prices

As a result of these developments, the prices have been witnessing a fluctuating trend. The prices of garbled pepper, which stood at `197 per kg in the beginning of the current month, fell to `191 per kg by the end of the first week.

By August 20, the prices had gone up to `204 per kg. The prices have gone up in the international market also.

The Indonesian offer price increased by a few hundred dollars in the past one week, one exporter said. Still, the Indian price was the highest at $ 4,850 per tonne. Vietnam’s offer price stood at $4,650 per tone for ASTA grade. – IndiaTimes

Tags: black pepper