KOCHI, OCT. 6:
Pepper futures on both the National Commodity exchange and the commodity-specific regional exchange showed a downward trend while the spot market gained on strong demand.
Hedgers and position takers were not active on the market while the day traders were active. As a result, the futures market decreased. At the same time in the international market all the origins except Brazil were showing firmer trend. Availability of material in Indonesia was tight following a drop in production. A similar situation exists in Vietnam also. In India also there is a squeeze in supply. Given this scenario the pepper market world over is likely to remain firm during rest of the year, according to S. Kannan, Executive Director, International Pepper Community, Jakarta.
According to him, black pepper output in Lampung this year is significantly lower by 15,000 tonnes from around 55,000 tonnes in 2012. In Brazil, this year production is estimated to be normal. In Vietnam, current stock is estimated to be limited. Out of the 1,18,000 tonnes harvested this year, a volume of around 1,00,000 tonnes have been exported during Jan-Aug.
It is reported that the Lampung crop is almost exhausted and there is no selling pressure from Brazil. As the rain gods have been kind the crop of 2014 is likely to be better than that of 2013 hence the farmers are advised not to hold many stocks this year, he said.
From the recent evaluation of the supply-demand scenario and the prevailing tight supply position, he said that one can assess that there is going to be shortage of 6,000-9,000 tonnes during the last quarter of the year.
Add to this, the importing countries have maintained a hand-to-mouth approach towards inventory and hence, there is no carry over left in the consuming countries. “This situation is precarious as any spurt in demand will boost the prices and the volatility will be high”, he pointed out.
Indian parity, which remained competitive early last week turned out to be nearly outpriced following strengthening of the rupee against the dollar at the weekend, market sources told Business Line. Dealers from Bihar and Jharkhand started turning towards Kerala and were active in the markets in Kannur, Kasargode, Malappuram, etc., of late. They were reportedly buying low bulk density pepper looking bolder such as Karnataka pepper directly from the primary markets at Rs 401-405 a kg.
This shift of these buyers who were hither to covering from Karnataka to Kerala gives the impression that the stocks in Karnataka have dried up, they said.
The active contracts on the futures market on the NMCE last week decreased by Rs 390 and Rs 100 respectively to Rs 43,150 and Rs 43,450 a quintal. Turnover dropped by 112 tonnes last week to 60 tonnes at the weekend. Net open position declined by four tonnes to 19 tonnes.
On the IPSTA, Oct and Nov contracts decreased by Rs 35 and Rs 235 respectively to close at Rs 43,375 and Rs 43,275. The turnover on this platform showed a sharp rise by 256 tonnes last week to close at 356 tonnes at the weekend.
Spot prices on good buying support soared by Rs 300 a quintal to close at Rs 40,400 (ungarbled) and Rs 42,400 (garbled) a quintal on Saturday. Indian parity in the international market was at around $7,350 (c&f) for Europe and $7,600 a tonne (c&f) for US.
Source: The Hindu