Pepper futures market bounced back sharply on Thursday on bullish activities and buying interest with Jan and Feb contracts moving up substantially.
Market opened at lowest levels at the beginning of the opening session and traded throughout with marginal volatility and sluggishness. But from the beginning of the closing session the market started moving up sharply on reports of default by some of the sellers for the Dec delivery which matured on Dec 20.
During the mid-closing session Jan touched Rs36,525 a quintal up by Rs 945 from the lowest price today while Feb touched the highest price just before closing at Rs35,485 up by Rs890 from today’s lowest price, but compared to yesterday’s closing it was up by Rs955 a quintal.
The bull operators taking the default report as a tool pushed up the prices. The sellers were said to have “a long rope to declare himself a defaulter because of technical reasons”, market sources told Business Line.
Total turn over shot up by 144 per cent i.e., 4,268 tonnes to close at 7,220 tonnes while the open interest declined by a negligible Six tonnes to 8,108 tonnes.
Some were liquidating Jan position and buying spot and validity expired pepper at competitive lower levels. Arrivals were limited and some were offering at Rs345 – 350 a kg.
Jan contract on the NCDEX increased by Rs895 to close at Rs36,490 a quintal. Feb went up by Rs955 to close at Rs35,485 while Mar moved up by Rs5 to end at Rs34,600 a quintal.
Dec open interest dropped by 119 tonnes to 6,809 tonnes while Feb and March moved up by 46 and 45 tonnes respectively to close at 770 tonnes and 349 tonnes.
Spot prices in tandem with the futures market trend and buying interest increased by Rs300 to close at Rs34,300 (ungarbled) and Rs35,800 (MG 1) a quintal.
Indian parity in the international market was at $,7150 – $7,200 a tonne (c&f) Europe and $7,450 – $7,500 a tonne (c&f) for the US.
Buyers overseas are reportedly are in the process of going on Christmas/New Year holding with the hope that on their return in the first week of next year the prices would see the prices at lower levels.
According to an overseas report today occasionally some business was done for both black and white pepper from Vietnam at lower levels.
Arrival of new crop has begun in Vietnam albeit in small quantities which is usual for the time of the harvest season. High price fluctuations during the past few months with faq 500 g/l touching the highest level of around $ 8,000 a tonne (fob) and today at around $6,500 a tonne (fob) have paved the way for an unhealthy situation for both buyers and sellers, the report said.
The high carrying cost in recent months, following abstention by buyers, said to have triggered some panic selling by holders. The new crop size has been put at somewhere between 1.3 and 1.4 lakh tonnes. Some had also projected it to be around 1.2 lakh tonnes.
“However when all buyers adopting the same sort of attitude, it has proved that once demand is growing, prices can easily turn northbound again in a fast way”, the report claimed.
Quotations for prompt shipments seen today were: Black pepper FAQ min 500 G/L $6,500 a tonne fob HCMC ; FAQ min 550 G/L $6,800 a tonne; White Pepper Double Washed at $9,700 a tonne.
Most of the HCMC shippers are reportedly “cautious to offer new crop for forward positions as they feel too uncertain and reason that risks are too high to anticipate such sales”.
According to another report exporters seem ready to do fresh business at lower levels and there were reportedly offers from India for MG 1 between $7,275 – $7375 a tonne CFC1.5 New York/Baltimore for Jan/Feb/March shipments.
Lampong (or Lampong resellers) were said to be willing to sell non-treated at $7,400 a tonne (c&f) New York.
However, market will become activated only after the Christmas/New Year holidays in early 2012.