Conflicting signals are rocking the pepper market with prices on a downward spiral in spite of strong fundamentals. While one section of the traders claim that a turnaround is round the corner on the background of improved consumption, another section reports that the US has built up huge inventory of finished pepper products in anticipation of a price surge.
?The decline in the market prices and trading volume is attributed to the decisive role of the Indian commodity exchanges, which is also taking in non-market signals,? an exporter told FE. Limits imposed by the FMC on open interest positions for members of futures exchanges and their clients for nearby pepper contracts have adversely hit pepper exports, besides giving wrong signal about the pepper market prices in India, he said. The overseas purchasers are worried because of thecontinuous fall in the prices allegedly created by market speculators. Taking cue from India, other origins are scaling down their offerings, he added. The accredited warehouses in India have 12,421 tonne of pepper stock as on the current date.
?US traders will become active in September to cover for the winter requirement and prices are likely to surge on it,? a trader said. Demand for pepper usually peaks during the period September-November, Faiyaz Hudani, Research Analyst at Kotak Commodity Services said. ?Prices will bottom up soon to rally ahead in the coming days.? He expects the market to revive as the domestic consumption picks up. ?A rally in pepper may not be forthcoming as the US has strategically built up reserves of finished product,? a trade consultant told FE.
