"I am positive that the prices will further move up,"Kishore Shamji Kuruwa, president of the Indian Pepper and Spice Trade Association (IPSTA), said in an interview.

"There has been a sharp fall in the crops of Indonesia and Brazil, and together it (shortfall) is estimated to be about 20,000 tonnes," he said.

"By the time the Indian crop reaches the market early next year, international stocks will be considerably lower."

Prices of domestic black pepper have been rising since early October, following a reduction in global pepper stocks.

Spot pepper opened on Wednesday at Rs 25,800($594) per quintal in Cochin, up Rs 800 from last week's level of Rs 25,000. December pepper futures opened at Rs 27,550.

Spot prices have in recent weeks climbed sharply from Rs 22,350 in the last week of September, Rs 21,800 in August and Rs 17,400 in May.

Traders have estimated India's 1999/2000 (April-March) pepper output at 75,000-80,000 tonnes, against about 60,000 tonnes in 1998/99.

Kuruwa said the arrival of the Indian crop would not ease pressure on pepper prices because the country's growers had built up enough liquidity to hold their crop and influence prices.

"It is not the exporters or importers who decide the price of pepper now. The farmers, who have benefited by the boom in prices in the last three years decide prices as they have substantial liquidity," he said.

Pepper exchange promotion

Kuruwa said Ipsta was planning to aggressively promote the International Pepper Futures Exchange to attract more international traders.

"We will use the International Pepper Community meeting in Colombo next month to clear misgivings international traders have about the exchange," he said.

Ipsta, which runs the exchange, would also be part of an Indian government team visiting Europe next month, he said.

Trading at International Pepper Exchange, launched last year in Cochin city, has been at a standstill as dollar-denominated trading has not yet begun despite federal government approval in January.

Kuruwa said the exchange had appointed a consultant to establish a dollar trading system.

"We are also trying to streamline the application process which some international traders find very cumbersome."