Vietnam holding pepper export for better returns

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While the world is glued to Vietnam for a cue on the pepper market, the world's largest producer is holding on its strategy and stocks.

Unlike the past when it used to sell almost 60% of its annual crop in the first five months of the calendar year, the world has hardly seen any stocks coming out of Vietnam or any forward contracts, traders said. Interestingly, Vietnam is actively buying from the Indian market, while filling its large warehouses with stocks that could go above 1, 00,000 tonne, traders said.

"Earlier Vietnam used to sell more than 15,000 tonne of pepper per month, from January to May. This year hardly any stock has moved out of the nation," Nandakumar P, a trade consultant told FE.

He feels that the Vietnamese farmers are trying to hedge coffee with pepper to gain the maximum. "Earlier the urgency of the Vietnamese farmers to sell their crop tended to depress the global prices. Vietnam now believes that they can get better returns, if they hold and sell strategically," he said. The estimates of a global shortage gives them more hope that they can reap better profits, he added. Nandakumar is circumspect about the Vietnam strategy, as the volume of stock is huge. "The Indonesian crop comes by June followed by Brazil and other origins. Arrival pressure from these nations may force Vietnam to lower their price," he added.