Pepper prices likely to firm up on expectation of fall in Vietnamese crop

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Kochi, April 14: The pepper market has been ruling flat over the last few weeks with hopes of an improvement after the announcement of the extension of the pepper export subsidy for 20,000 tonne.

The trade has been eagerly watching Vietnam where the harvest season has just started. There have been reports that the Vietnamese production would be lower at 83,000 tonne whereas the Indian production has been pegged at 55,000 tonne.

Prices have been ruling in the Rs 69-72 per kg range with future prices remaining higher, giving traders the option to book profits by buying in the spot and selling in the futures, sources said. Though exports were yet to pick up, the Spices Board was hopeful of higher exports in the wake of the extension of the subsidy scheme where Rs 2 would come in for internal transportation and another Rs 5 for international freight.

Factoring in the subsidy, Indian prices were ruling at $1,700 a tonne when it was $1,500 for Vietnamese pepper. Indian pepper usually ruled higher than Vietnamese by $150-200. Brazil and Indonesia were selling at $1,600-1,650.

Malaysia has been catering to specific markets and hence was overpriced and on par with India at $1,700.

The subsidy scheme targets export of 20,000 tonne of domestically grown pepper and the Spices Board has been authorised to implement it. The board’s seeking all details of domestic purchase of material exported has caused some disturbances as some of the exporters, it is learnt, were finding it difficult to furnish details.

The market was hopeful of better international trade as there was likelihood of the Centre softening its stand bringing even EOUs (export-oriented units) under the ambit of the subsidy. This could perhaps explain the heavy buying during the last few weeks, said trade sources.