Domestic pepper market likely to remain firm on lower supplies

Uncertainty rules the pepper market, which has been gaining continuously on lower availabilit of pepper. Indian market is trading at a premium compared to the global market and has been importing pepper from Vietnam in the last three months. Global prices have not softened and continue to remain firm in spite of good exports by Vietnam.

?Vietnam has exported nearly 60,000 tonne during the January-May period. Exports through cross border trade which is not documented have also found their way to the buyers,? Kishore Shamji, one of the senior exporter and member of the India Pepper and Spice Trade Association said. He feels that the global market is looking for cues from the Indian market, which is highly priced.

According to Kotak Commodity Services, Indian pepper (MG-1) is quoted at $ 6,600 per tonne (c&f) at New York, Vietnam?s Asta is quoted at $ 5,850 per tonne (fob), Indonesia Asta at $ 6,100-6,150 and Brazil B-1 Asta at $ 6,200 per tonne. Domestic spot prices moved from R21,500 per quintal to R31,000 per quintal in few days. On Friday evening spot price for pepper was recorded at R286 per kg. ?Buyers are covering the bare necessity and are not long. Demand is there and it will support the price in the coming days,? P Nandakumar, a trade consultant from Kochi said.

?The demand from Asia led by China is increasing but is not reflected correspondingly. Market is slowly shifting from the US and Europe to the South Asian countries where disposable income is increasing,? he said.

India imported nearly 3,000 tonne of pepper from Vietnam during the March-May period, he added.

Nandakumar feels that the Indian demand is also understated. ?Higher eating out by a large section of the society and changes in lifestyles have increased the consumption of spices and flavoring agents,? he said.

According to Jakarta-based International Pepper Community, India is estimated to import 13,250 tonne of the commodity and export nearly 19,000 tonne during 2011. It still remains the largest consumer of pepper from the producing countries with domestic consumption estimated at 45,000 tonne, which is marginally higher by 1,000 tonne from 2010. Indian production is projected to decline marginally by 2,000 tonne to 48,000 tonne during 2011.

?Indonesian is not currently offering any black pepper their pepper comes to the market by July. Indonesia is only selling white pepper currently,? Nandakumar said. Faiyaz Hudani Kotak Commodity Services feels that the crop arrivals in Indonesia and Brazil would not make much difference as reports suggest lower crop in both countries. ?Weather conditions in Indonesia are not conducive for pepper and we expect lower crop. Similarly, in Brazil the pepper crop would be less on less acreage,? he added. He expects the domestic market to remain firm on the fundamentals but expects a bit correction, as the spot is currently cheaper than the futures.