Pepper rises on buying support

Kochi, Dec 5

The pepper market last week witnessed some calculated moves world over aimed at pulling down the prices of this commodity by operators by passing on wrong information about supply and prices in different origins.

Such an attempt in the international market to pull the prices down were brought to light by the Brazilian Pepper Trade which alleged “there is a move by the bears trying to pull prices down caused a big indignation among Brazilian growers and exporters this week”.

It said the quoted prices for Brazilian pepper by a European broker in his website were around $200-300 a tonne below the other origins, aimed at “creating a feeling in the international market that Brazilian prices stated to slide down”.

But the Brazilian reality is that “the average prices asked are between $4,700 and $4,900 a tonne f.o.b for B2 and Asta grades”.

Pepper prices on the futures and spot market during the week were up on buying support on bullish reports and activities.

December, January and February contracts increased by Rs 1,085, Rs 1,051 and Rs 1,045 respectively to close on Saturday at Rs 22,831, Rs 23,041 and Rs 23,201 a quintal.

Total turn over increased by 11,263 tonnes to 67,090 tonnes. Total open interest went up by 1,541 tonnes to 15,426 tonnes.

Spot prices soared by Rs 500 on buying support amid limited supply to close on Saturday at Rs 21,200 (un-garbled) and Rs 21,700 (MG 1) a quintal.

In India local arms of the multinational companies with multi-origin origin operations wanted to sell farm grade pepper held by them at Rs 10 below the December delivery price allegedly aimed at misguiding the market about the availability.

The buyers at the same time kept on insisting on Rs 12/kg discount. However, primary market dealers said to have bought good quantities on the expert advice of exporters.

Meanwhile, bull operators also advised people to cover. Investors sold spot and bought back January. Thus, the market remained highly volatile with hectic activities by both the bull and bear operators, which in turn has kept the market unstable and as a result sellers could not make any commitments while the buyers also are placed in a similar dilemma, market sources told Business Line.

The trend so far shown by the market world over gives the impression that there is a mismatch between demand and supply this year and it is clearly evident from the price movements, they said. Such a situation has been predicted by IPC recently and other establishments earlier in the year, they claimed.

Prices quoted for black pepper of different origins in $/tonne c&f) New York were MG 1 asta – 5,300-5,400; Lampong asta – 4,900-4,950 f.o.b; Lampong 550g/l – 4,850-4,900 f.o.b; Lampong 500g/l – 4,750 – 4,800 f.o.b; Brazil B asta – 5,000 – 5,050; Vietnam asta -5,475-5,500 Dec/Jan; Vietnam asta - 5,350-5,400 new crop Mar/Apr ; Spot USA MLSV asta treated – 5,400 ex warehouse New York/New Jersey.

Total exports of pepper this year up to September from all major exporting countries has decreased, according to a report from Brazilian Pepper Trade. Around 1,93,000 tonnes of pepper were shipped from Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka. During this period exports from Brazil, India and Vietnam have dropped while from others increased. Compared to around 1,97,000 tonne exports in the last year's corresponding period, there was a slight drop of 2 per cent, it said. The six main producing countries together exported around 19,800 tonne in September as against 22,500 tonnes in September 2009, registering a decrease of 12 per cent, due to significant fall of export from Vietnam and Brazil. Export from other countries has increased, but can-not offset the significant fall of export from Vietnam and Brazil, it added.

Global black pepper market was calm during the week. F.o.b price remained unchanged from last week. In-spite of short supply in domestic market, except Sarawak, prices decreased in the range of 1-3 per cent. In India, prices dropped in the mid of the week, but it then rose to Rs 22,825 fr 100 kg locally and $5,250 a tonne c&f at the end of the week. In Vietnam and in Sri Lanka, local prices decreased by 3 and 2 per cent respectively, while in Sarawak, the local price increased marginally by 1 per cent. In Lampung prices were unchanged both in local as well as f.o.b. Marginal fall in dollar for local price was due to weakening of Indonesian Rupiah against dollar.

The market for white pepper was also quiet and showed a mixed response. In Sarawak, white pepper prices increased by 2 per cent both in local and f.o.b. In Bangka local prices fell by 2 per cent and 1 per cent in f.o.b. A sharp drop of 8 per cent was recorded for local price in Vietnam.

(Source: http://www.blonnet.com/2010/12/06/stories/2010120650491200.htm)