Tight supply of pepper in India and Vietnam has helped prices from crashing despite drop in demand, traders said. Heavy rains in most southern states that produce bulk of the pepper in India have delayed harvest which normally starts in December and extends to March.

Sudha Acharya of Kotak Commodities said that unseasonal rains have delayed drying of berries and the harvest for the coming season. ?Black pepper is currently at its maturing stage and current clear weather may help in drying the berries,? she added. According to a report from Angel Commodities, lackluster demand from overseas and domestic buyers will keep prices range bound in the coming weeks.

?Prices will also take cues from the price parity of major origins in international market. At present major origins are quoting almost the same rates,? Angel said.

?Meanwhile, domestic demand has been slow from upcountry dealers. Fresh crop arrivals in small quantities have started in interior regions of Kerala . Overseas demand is expected to remain slow for the Christmas and New Year celebrations,? Sudha said.

On Wednesday, pepper futures reflected the market sentiments and fell at the National Multi Commodity Exchange of India ltd (NMCE).

In NMCE, February futures lost Rs 484 to close at Rs 21,525 per quintal, while march contracts were Rs 465 down and closed at Rs 21,730.00. Angel feels that the prices will take cue from pepper production in India in 2010-11.

Jojan Malayil of Kochi-based Bafna Enterprises does not concur with the view that the market would ease on arrival pressure form India and Vietnam. ?Farmers will hold on to the crop as they know that the global supply is tight,? he said, adding that pepper prices would touch new highs in 2011.

With buyers surviving on bare minimum inventory, any demand for pepper is likely to result in the market moving up sharply. According to the estimates from the Jakarta-based International Pepper Community (IPC), carry-forward stocks in producing countries is projected to decline by nearly 6 % to 95,442 tonne in 2010. Global pepper production is also estimated to be down by 2% in 2011 at 3,09,952 tonne against 3,16,380 tonne in 2010 and 3,18,662 tonne in 2009.