Pepper prices are likely to be volatile in the current season with Vietnamese and Indian farmers holding on to their crop.

Staggered selling of pepper could lead to farmers and traders reacting more to external cues rather than the fundamentals of demand and supply. Arrival pressure, seen normally during the time when Vietnam and Indian pepper comes to the market, has been absent so far.

Traders see a downward bias in the coming days with arrivals peaking in Vietnam. “Harvesting and arrivals to the market have been delayed by a month and shipment during January has been lower than normal,? Jojan Malayil of Kochi-based Bafna Enterprises said. He believes that the market would ease a bit in the near-term with pepper arrivals gathering speed in Vietnam but in the long-term he is bullish about the commodity.

?Vietnamese are holding back black pepper and quoting aggressively for the white pepper. Prices are very high at the moment,? P Nandakumar, a trade consultant from Kochi said.

He noted the prices would decline in some days as stocks pile up. The Vietnam Pepper Association (VPA) has revised its production figures to 1 lakh tonne from the earlier 90,000 tonne. VPA reports that the country’s pepper productivity would exceed the 2010 mark by producing 1,00,000 tonne. Trade source familiar with the country say that the production would be around 1,20,000 tonne in the current season.

Faiyaz Hudani at Kotak Commodity Services does not confirm to the view and is very bullish about the commodity.

?Vietnam farmers will hold on to the crop and not sell. They have enough disposable income form cocoa, coffee and rubber,? he said.

Weather concerns in Indonesia, Malaysia and Vietnam will delay crop and will affect production. ?World supply has decreased by 10% in 2011 compared to 2009.Stock to usage days is at 96 days compared to 93 days in 2010. Pepper prices are in bull cycle,? he added.

Faiyaz says that Vietnam will sell in a staggered manner to get the maximum gains. ?They know that other origins including India does not have much pepper. They are the only large source for pepper,? he said.