Global pepper output to tank for first time after several years: Report

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Published: December 12, 2019 2:16:14 AM

The report mentions that continuing excess production is pushing the ratio of global stocks, relative to demand, close to the previous high and and price bottoms tend to occur around stock-ratio highs. Historical data suggests that the market has seen the largest part of the decline, although it may take more time before reversal sets in, the report adds.

Global pepper output, pepper buy, pepper  sale Rajiv Palicha of Nedspice India told FE that there was still enough supply of pepper in the global market, and the market is likely to remain range-bound and estimated to increase gradually only in the long-term.

Global pepper production is estimated to decline this season by 74,000 tonne for the first time after several years, mainly driven by unfavourable weather in Vietnam,according to a report by Netherlands-based Nedspice. However, the mismatch between global supply and demand of the spice will continue to put pressure on the price with supply seen higher by almost 60,000-70,000 tonne.

Rajiv Palicha of Nedspice India told FE that there was still enough supply of pepper in the global market, and the market is likely to remain range-bound and estimated to increase gradually only in the long-term.

Pepper Crop Report 2020 by Nedspice estimates that the total pepper production in crop season 2019-20 at 5,58,000 tonne, which still remains significantly higher than total demand of 4,96,000 tonne. The report adds that the excess production will cause global stocks to increase further,as it will likely to take some time before supply lines align with demand. Prices are close to or below production costs in many countries.

The report mentions that continuing excess production is pushing the ratio of global stocks, relative to demand, close to the previous high and and price bottoms tend to occur around stock-ratio highs. Historical data suggests that the market has seen the largest part of the decline, although it may take more time before reversal sets in, the report adds.

The report states Vietnam production is estimated to drop 18%, largely due to unfavourable weather. Brazil’s crop remains above 90,000 tonne this season, Indonesia is expected to see a decrease in production to 55,000 tonne and India is expected to have a good crop of 74,000 tonne this season.

Regarding India, Rajiv said Indian production is estimated to increase 7% over the last season and does not see any reason for a sharp upswing in price. Moreover, starting of the harvest season and fresh arrival were likely to put pressure on the market.

Jojan Malayil, chief executive of Kochi-based Bafna Enterprises, feels that the market has seen the bottom and the journey towards North for the prices could start from mid-2020.

“The excess of 70,000-75,000 tonne of pepper in the market is not very big and with Chines consumption increasing significantly we can see a revival in market prices ,” he said. He added that China ‘ has overtaken US as the largest market for pepper and consumption of pepper in China could touch 90,000 tonnes in 2020.

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