Pepper prices soar on supply constraints

Black pepper prices rose 15% in the spot market here in the past one month on concerns of supply constraints. Spot prices increased to Rs

154 per kg on April 5 from Rs 132 per kg in the second week of March. However, since then the prices have seen a slide to Rs 152 per kg on April 6 and further to Rs 149 per kg on Wednesday.

In the futures market, the April contract has seen a 17% rise in the same period moving up from Rs 131.17 per kg to Rs 153.02 per kg on April 6. Initially, it was the low market arrivals that caused prices to move up.

However, reports that the production in Vietnam could be lower this year have also affected the sentiments driving up the prices. According to estimates, Vietnam had exported 1.3 lakh tonnes of pepper last year which could include some carryover stocks. It was reported pepper output in Vietnam could see a 20% fall this year.

However, exporters here feel that there will not be a major dip in the production. Sources said that buyers are waiting for prices to cool down further affecting the exports of the commodity. They said that major buyers are following a hand-to-mouth buying pattern. “They have covered their requirements till March, now they are waiting for prices to fall,” said an exporter.

In the domestic market, the arrivals into the market continue to be lower as growers are holding on to stocks. With the prices of other major crops, such as rubber, cardamom, tea and coffee ruling at attractive levels, pepper growers are in no hurry to sell the commodity. “This is true in the case of growers in Vietnam also,” the sources said.

Meanwhile, market players also said that the dry weather conditions will take a toll on pepper output in the coming year. But in the current season, pepper prices will depend on the recovery in demand from major buying countries and supply from Vietnam.

indiatimes

Tags: Vietnam black pepper, Vietnam Pepper prices