Lower closing stock to keep pepper prices range-bound

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Chennai, Jan 30: The pepper outlook for 2006 made during the World Spice Congress here projects a total production of 2,45,750 tonne with a lower closing stock providing cushion for keeping the prices range-bound.

According to Mr Vinayak Narain of Singapore-based Olam International, who presented the crop and market outlook for pepper, while the year started with an opening stock of 77,983 tonne, it would end with a stock of 56,133 tonne. But this was adequate to keep prices within the range for quite sometime.

However, the outlook put production slightly lower than the International Pepper Community (IPC) projection of 2,65,200 tonne. In the case of Vietnam, the production has been projected at 83,000 tonne, when IPC has put it at 87,000. According to Mr Vinayak, the trigger points for this year include expectation of a delayed crop in Vietnam, which usually has its harvest in February. Also, with coffee fetching better price, the growers were quite bullish and were unlikely to switch over to pepper, he added.

Over the last few years, it was the stock surplus that was the reason behind low volatility in prices. However, a section of those present at the conference felt that the stock would not be reduced as India’s domestic consumption was estimated to be 66,000 this year, when the average had been around 45,000 tonne.

While Mr Vinayak felt that better living standards would raise domestic consumption, several leaders in the trade said this was unlikely to raise it by nearly 20,000 tonne and the carryover stock at the end of this year would be around the same as that at the beginning. Unlike the IPC, which projected Indian production at 45,000 tonne, it had now been estimated to be 55,000 tonne which was generally acceptable. Though there was a 35% growth in production over the five years up to 2005, a declining trend had set in after 2003. Vietnam had grown to be the largest global producer accounting for 34% of the total production and over the last five years it posted a 150% growth. In the case of India, production grew by 38% till 2002 but had been erratic since then.