Pepper imports to increase

Written by Rajesh Ravi | Kochi, Oct 28 | Updated: Oct 29 2007, 08:07am hrs
Lesser domestic availability and lower international prices are likely to increase the import of pepper into India, traders said. In fact, there are reports of Indian exporters contracting pepper from Vietnam and Brazil to cover obligations. Processing firms engaged in export of spice oils and other value added products are likely to source more pepper from cheaper origins.

Approximately 12,000-16,000 tonne of pepper is imported annually by India, but during the current year imports have been negligible, because until recently Indian prices were lesser than other origins.

Pepper prices are on an upward swing in the domestic exchanges, and stocks at the accredited warehouses have fallen to less than 3,000 tonne. Currently, Indian pepper is the costliest among all origins and quoted at a premium of $200-300 for a tonne.

Reports of supply tightening in the years to come due to crop shortage have firmed up the market, and analysts are bullish on the short-term and long-term markets.

In fact, technical reports suggest that futures contracts could rally to new heights in the days to come.

Interestingly, the US importers who have contracts with Indian exporters are booking profits by negotiating to settle for cash compensation instead of physical delivery.

A trader in Kochi, who did not want to be named, said that several exporters have re-negotiated with the US buyers. Unlike defaulting on contracts, this adjustment does not get reflected in the books and the compensation is often adjusted in future contracts.

In rare occasions of immediate settlement, exporters may source supply from a cheaper destination to avoid further complication. Exporters are hard pressed following pepper spot and futures zooming ahead during the past two weeks.

Traders who were caught unaware are now trying to import pepper to meet the domestic shortage and requirements of processing companies.

Indian pepper exports increased by 36.54% in volume terms during the first six months of the current fiscal, to touch 17,000 tonne as against 12,450 tonne in the same period last year. The Spices Board target of exporting 30,000 tonne of pepper in the current FY will also run into trouble given the supply situation.