Sluggish demand, probe put pressure on pepper prices

Written by RajeshRavi | Kochi | Updated: Dec 27 2012, 05:43am hrs
Pepper prices are under pressure as demand continues to remain sluggish even at lower levels. Reports of higher supply in the coming season and arrival pressure from the Indian and Vietnam crop are likely to impact the market prices. A probe by the Forward Market Commission (FMC) is also impacting the sentiment in the Indian market.

There was a rumour that cartelisation was the motive for skyrocketing prices earlier. High price expectations tempted market participants to accumulate more positions. However, prices corrected its early gains and liquidated sharply after the FMC launched an investigation against the unusual price movement, CP Krishnan, director of Geojit Comtrade said.

The better crop expectation in the local and overseas market influenced prices. Liquidation of crops into the market before the new crop arrival weighed on the sentiments, he added.

Jakarta-based International Pepper Community's (IPC) estimates the total global production during 2013 at 3,16,832 tonne and exportable surplus at 3,19,098 tonnes respectively.

Indian production during 2013 is pegged around 55,000 tonne which is nearly 30% higher than the crop in 2012.

Indian domestic consumption and exports in 2013 has been shown as 43,000 tonne and 25,000 tonne respectively. Traders feel that the Indian crop would be higher around 60,000-65,000 tonne.

Demand is very poor despite the market correcting sharply. The supply is also very good. Prices will come under pressure as the new crop comes in, Faiyaz Hudani of Kotak Commodity Services said.

Krishnan feels that the volatility seen in prices during the year has been somewhat unusual. Prices started this year at R32,000 a quintal and slowly dragged down to R29,500 by the mid of February, but swiftly recovered and created an all time high of R45,700 in NCDEX futures platform.

However, after demonstrating multi-month consolidations, prices are now trading at R33,500 a quintal in the futures market for February delivery contract, he said P Nandakumar, a trade consultant from Kochi, feels that the market could witness some distress selling soon by traders.

Business is dull due to the economic slowdown and no one is buying huge volumes. Most of the markets are covered.

Geojit reported that during the JanuaryOctober period, Indian pepper export was around 15,700 tonne as against 18,000 tonne during the same period of last year.

Pepper harvesting will begin by the mid of December month in Kerala and arrivals will gain pace in January.