Pepper market continued to remain volatile last week also with bullish sentiments ruling later in the week on genuine buying interest amid limited supply.
Contrary to expectations the supply scene remained squeezed with no fresh pepper arriving at the terminal market even after the peak harvesting season has started. Some in the trade attribute this phenomenon to buying directly from the primary market by inter-State dealers from Tamil Nadu on cash and carry basis at the terminal market price.
The reason for such buying pointed out by them is that there is no tax levied on pepper in Tamil Nadu. Therefore, by paying two per cent tax here they could take the material out.
Second is that the major growers/primary market dealers, who had fully sold out their old stocks when the prices were hovering around at Rs 350 a kg last year, were holding back their produce/stocks.
The third argument is that the industry both, extraction and green pepper in brine manufacturers had bought light and green berries earlier and that had resulted in a squeeze while some of the growers claimed that the crop, contrary to earlier projections, is around 50 per cent of what was estimated earlier.
Whatever may be the reasons, the arrivals continued to remain thin making availability of the material only on the exchange platform.
At the weekend 2,136 tonnes of pepper marked for delivery when the February contract matured on Friday. Probably, apprehending some default in delivery many of the buyers desired to take early delivery before the maturity of Feb. But, the sellers were said to have not accepted it. All the active deliveries moved up last week. Mar, Apr and May increased by Rs 1,215, Rs 1,280 and Rs 1,445 respectively to close at Rs 31,030, Rs 31,375 and Rs 31,625 a quintal.
Total turn over increased 4,260 tonnes to 21,510 tonnes. Total open interest decreased by 188 tonnes to close at 8,121 tonnes.
Spot prices increased by Rs 1,200 on good buying interest and limited supply to close at Rs 30,800 (ungarbled) and Rs 32,300 (garbled) a quintal.
Indian parity in the international market was at around $6,700 a tonne (c&f) Europe and about $7,000 a tonne (c&f) for the US. High fluctuation in the prices has turned the buyers reluctant. Even the domestic buyers are also confused, the trade sources pointed out.
With a stable VND-Dollar rate, prices have moved up by about $200-250 a tonne in the last 72 hrs. Indian markets are also firm with shorts trying to cover February positions and the physical market very tight.