Pepper futures tapers; countries cut price

Our Commodities Bureau in Kochi

The halt in the spot pepper trade has had its reflections on the futures trade, with prices depressing to abysmally low levels. Spot pepper trade was halted as part of the agitation against the state government’s imposition of turnover and additional sales tax. As a result there was little trade in the futures market for the last three days. Futures contract was resumed only on Friday. There are no inventories and buyers are keen to have sufficient stock for two to four weeks, according to IPSTA sources.

Prices on Friday opened at very low prices. The August contracts were opened at Rs 8,300, September Rs 7,800, October Rs 8.050, November Rs 7,600, December Rs 7,400 and January Rs 7,000.
Coupled with this, is the move by both Brazil and Indonesia to sell its commodity at a lower price. The season there is about to begin.
Indonesia has brought down the price of its pepper from $1,600 to $1,450. Brazil too has cut its price by $150 to $1,350 per tonne. This should see the two countries vie for the European and US markets, according to pepper traders here.

There is also a move by the two countries to sell their commodities in advance. The two have regretted their not selling their stock in advance last season. According to market sources, the two countries have offered their 2002 stock at very low prices. Brazil is said to have made an offer at $1,000 a tonne and Indonesia at $1,200. This would put other markets in a fix. For if the offer, which has been made to the US and European countries is accepted, there will be little scope for trade by other countries.

However, there is a strong belief that these could be efforts by major players to bring down the price and make traders deplete their stock at the prevailing price.

Meanwhile, there has been little progress in the starting of the dollar-denominated contracts. Opening of dollar accounts with the RBI continues to be a long process, according to IPSTA sources. However, certain traders felt that in such depressed market conditions even dollar contracts would do little good and this was time for introspection to find solutions to the problems facing the commodity market.