Pepper prices likely to fall on good stocks with traders

With major pepper buyers adequately stocked for the season, traders said pepper prices might now come down from their current highs.

With major pepper buyers adequately stocked for the season, traders said pepper prices might now come down from their current highs.

Traders said as Indian pepper is out priced in global trade and imports are also on the higher side, fundamentals don’t support the current price rally.

“Vietnam has sold more than 1 lakh tonne of pepper in the first eight months of this year. It is reported that they have more than 20,000 tonne of pepper left to sell in the current season,” Jojan Malayil of Kochi-based Bafna Enterprises said.

US and Europe normally buy pepper during August-September period for the festival season. US buyers are long having procured substantially from the Indonesian market.

During January-July period, US has imported 29,864 tonne of pepper, which is the second highest volume in five years.

“So they (US) does not need to procure immediately and can wait to buy strategically,” he added.

Jojan believes that fundamentals do not support the current domestic price (Rs 200 per kg for garbled on Tuesday) and market would ease.

“Indian prices are held high by exchanges and farmers who are reluctant to sell have enough money from other cash crops and can hold on,” he added.

However, Sudha Acharya of Kotak Commodities is not convinced about the theory that pepper prices would ease in the coming weeks, she believes that demand, both global and domestic is robust.

“The market is reacting to liquidation of stocks by Indonesian sellers and will not sustain the slide. Supplies are tight and market will remain firm,” she said.

“The key player in the coming days would be Vietnam. If they have sufficient stocks and decide to sell before their new crop comes around January 2011, the market would take a dive,” a senior exporter from Kochi market told FE.

“If Vietnam decides to hold on to its stocks and the Brazilian crop is less than last years figure of 30,000 tonne, the market would remain firm. Or else, the market would come down both globally as well as in India”, he added. – FinancialExpress

Tags: Vietnam Pepper, Vietnam Pepper prices