High fluctuation consequent to the tug of war between the bull and bear operators, in pepper futures has become almost a regular phenomenon without any relation to the market fundamentals.
The market is pushed up one day by the bull operators and the next day it is pulled down by their counterparts.
“This neither helps the trade nor the grower while the high fluctuation is creating unnecessary tension” for the exporters who said “we are not able to make any commitment to overseas buyers because we don’t know what the prices are going to be tomorrow. We have to take the decision overnight”, market sources said. Buyers are also in a dilemma., they said. In fact, some overseas demand could come but for the high volatility, they claimed.
The FMC, they said, should take it up at the proposed meeting of the stakeholders in Bangalore on Monday and initiate proper action of arrest “this kind of high fluctuations, if they are created artificially and if not the reasons for it need to be explored”, the trade and some of the growers urged.
There has been a consistent bearish propaganda saying that the Vietnam has started offering lower FAQ 500 GL new crop (unclean). Some of the local bear operators have been making the propaganda that the Feb open interest is for nearly 6,300 tonnes and there won’t be enough people of take delivery.
Countering it bear operators were questioning about the availability as to “who will supply the material”. Availability continued to be thin at present as the new crop arrivals have not picked up yet. This phenomenon is pointing towards a potential drop in the output further from the projected production of around 43,000 tonnes.
From the upcountry markets the demand has started picking up as all the stockists are said to have exhausted their stocks. This coupled with the chill weather in the north Indian states seems to have made the domestic demand buoyant, they said.
Meanwhile, reports from Brazil said it was offering Asta grade at $6,800 a tonne (fob). Where as, MG 1 was available at $6,900 a tonne (c&f).
Strengthening of the Indian rupee in weeks have also aided the MG 1 to rise. “In fact, the rupee has appreciated by 20 per cent in the past 20 days. This means the local market has to come down by 10 per cent i.e., Rs 30 a kg from the Jan 3 price ,which was at Rs 335, in order to be competitive. Now we are at Rs 320 a kg viz., half way through”, some of the market sources claimed.
All the contracts last week fell sharply as the bear operators were in the driving seat. Feb, Mar and Apr contracts decreased by Rs 1,345, Rs 1,455 and Rs 1,405 to close at Rs 31,205, Rs 21,180 and Rs 31,255 a quintal.
Total turnover last week dropped by 1,707 tonnes, showing comparatively low activities to end at 19,789 tonnes. Total open interest increased by 1,424 tonnes to close at 9,753 tonnes indicating some good purchases and yet the market was down.
Spot prices last weekend remained steady at previous levels on limited activities amid thin arrivals to close on Saturday at Rs 30,500 (ungarbled) and Rs 32,000 (MG1).