High Volatility In Pepper Futures Market

Kochi: Pepper futures during the week witnessed high volatility as the bulls and bears were pushing the prices up and down. The prices showed an increase from Rs 163 to Rs 253 a quintal at the weekend close on the exchanges.

The total turn over during the week fell sharply by 16,489 tonnes on NCDEX to 85,597 tonnes while on NMCE, it dropped by 2,378 tonnes to 9,890 tonnes.

Total open interest on NCDEX declined by 21 tonnes to 21,060 tonnes while on NMCE, it fell by 174 tonnes to 1,865 tonnes.

Indian pepper remained out-priced in the world market during the week with the prices ruling at $3,800-3,850 a tonne (c&f). Prices of all the other origins were at lower levels. Strong domestic demand coupled with squeeze in supply kept the Indian parity higher and as a result no fresh demand from overseas was forthcoming.

The current Indian scenario could pave the way for increased imports in the coming weeks. If part of the pepper imported for value addition and re-exports entered the domestic market that might depress the prices in the internal market. A significant drop in international price is seems to be unlikely given the potential tight supply position.

IPC

According to the International Pepper Community (IPC) report for the week the black pepper market in general remained quiet with sporadic selling activities. This situation was mainly due to lack of excess stock in most origins and it is likely to continue until new crops enter India and Vietnam.

In India, the market was unchanged with prices almost the same as last week. Good sales over the previous months have reduced stock levels. Farmers preferred to hold until next crops arrive.

In Vietnam, the market was also quiet as large exports have depleted stocks. The market was also concerned about damages caused by the recent storm in central and south of Vietnam. Sellers were also very cautious about offering forward until the next crop situation becomes clearer.

In Sarawak, local prices eased from MYR 9,040 a tonne to MYR 8,150 a tonne this week, while FOB prices were stable at $3,800 a tonne. In Lampung, the average prices of pepper at farm level increased slightly by one per cent. FOB prices for Lampung black, however, were reported more competitive.

In Sri Lanka, average prices of pepper at growing areas increased from LKRs 359 a kg to LKRs 366 this week.

White pepper

In Bangka local price of Muntok white rose further to around IDR 40,500 a kg from IDR 39,500 last week. In Dollar terms, however it remained unchanged due to weakening of IDR against the dollar. In Sarawak, local prices also increased by MYR a tonne, but remained relatively stable in dollar terms as last week. FOB price also was stable at $5,300 a tonne.

Meanwhile, according to Brazil Pepper Trade Board “it is a very lazy week in Brazil as the 15th and the 20th are holidays with a weekend in the middle”. So there was no big activity there.

During the past three days, since last Monday, some Brazilian exporters pressed by the needs of export performance accepted some deal with prices below the market average such as lot of ASTA at $3,350 a tonne (f.o.b.) and some offers of B1 at $3,250 a tonne (f.o.b.). “However it does not look like a tendency or a trend”, it said.

India is still high at $3,800 a tonne (c&f) for MG1, Vietnam reported ASTA at $3,450 a tonne (f.o.b.) and 550 GL at $3,350 a tonne (f.o.b.).