Pepper supply remains tight on concerns over low yield

Written by RajeshRavi | Kochi | Updated: Feb 16 2013, 05:39am hrs
Supply of pepper remains tight as drought-like conditions in key producing regions raise doubts of a drop in yield. Most traders and farmers feel that Indias production during 2013 would be lower than the official estimates of 55,000 tonne, which is nearly 30% higher than the output in 2012.

Pepper harvesting usually begins by mid-December in Kerala and arrivals to the market gain pace in January. Arrivals to the market are less-than-expected and we have reports that the yield is lower than the initial estimates. Erratic climate is the reason and severe drought is seen damaging vines and the support trees, said Kishore Shamji, exporter and member of the India Pepper and Spice Trade Association (IPSTA). Earlier, officials at the Indian Institute of Spices Research (IISR) had expressed doubts over the projected yield as they felt that lower and delayed rains tend to lower berry formation.

Shamji expects prices to stay firm given lower arrivals and empty supply lines. We need 3,000-4,000 tonne of pepper every month for our domestic consumption. In some winter months, it goes up by another 1,000 tonne due to efficiency in production of spice powders, thanks to less wastage in cold climate, Shamji said. He expressed doubts over the production estimates for Vietnam too.

Kotak Commodities reports that lower output, coupled with poor supply from other producers such as India, could push prices in the near term. Vietnams earlier output estimate was 125,000 tonne, but some reports suggest that it would be 105,000 tonne or even lower, Faiyaz Hudani of Kotak said.

According to reports from International Pepper Community (IPC), global pepper production is seen at 3,16,832 tonne in 2013. Last season, production stood at 3,27,090 tonne, while, in 2011, the output was 3,17,750 tonne. Indian domestic consumption and exports in 2013 has been shown as 43,000 tonne and 25,000 tonne, respectively. Some traders had estimated that the Indian crop would be higher around 60,000-65,000 tonne due to higher production in Coorg, Karnataka.