Pepper prices are likely to remain firm due to supply concerns across the globe, says a new study by the Agricultural Market Intelligence Centre (AMIC) of Kerala Agricultural University. Based on market sentiments and the econometric analysis of pepper prices at Kochi, AMIC feels that a price level of R305 ? R325 per kg is likely to prevail during the next three months from September. On Monday evening spot price at the NCDEX counter stood at R322 per kg.

?Pepper trade is influenced by the level of Vietnam pepper production during the first half of the season, while the level of Indonesian output influences the second half,? K Satheesh Babu of AMIC said. Indian pepper comes to the market by November-December and is followed by the largest producer Vietnam.

Indonesian crop arrives normally in July while Brazil will be in the market by September. ? There are reports of Vietnam having liquidated bulk of its current year production. Reports from Lampung indicate that pepper harvest is almost complete and the production is lower than normal,? he added. Lampung is the main source of black pepper production in Indonesia, contributing to more than 60% of black pepper produced by Indonesia.

According to trade sources, production in Brazil is also not encouraging, production being adversely affected by the vagaries of climate.

On the demand side, AMIC estimates robust consumption. ?The domestic and international demand is likely to be on the higher side due to the festive demand from September on account of Diwali, Dussera and Durgapuja.

The onset of winter in Northern India and increased demand from Europe and America during Christmas will add to the pressure,? Sateesh said. According to industry experts, buyers in Europe, Japan and Australia do major portion of their buying for the next season during September ?October. US buyers also stock in advance for the coming Christmas and other festivals.AMIC reports that most of the small and marginal farmers have already sold their stocks when the prices were ruling high.

?Currently stocks are held by large farmers, traders, exporters and investors. The uncertainty in the share market is driving a large number of investors into investment in commodities,? he said. ?Intensive speculation is also a major driving force behind pepper prices moving higher, he added.