Pepper falls on selling pressure

The pepper futures extended the losses for 4th consecutive session on Tuesday. Futures started the day on slightly negative note on selling pressure.

However, prices took small recovery on short covering. Nonetheless, active selling on gains taking cues from prevailing sluggish spot market activity pulled down the prices and futures ended the day in red.

Outlook

The pepper April futures are projected to continue the bearish trend on strong selling interest on Wednesday. Long liquidation ahead of March contract expiry might pressurize the prices.

At spot market buyers are also not interested to buy as they are expecting further fall in prices. However, value buying in far month contracts can be seen towards the closing.

Prices quoted by India in international market moved up to $5050 per ton which very much inline with the prices is quoted in other origins. Therefore, few export inquires can be expected in coming days.

As per trade sources, some exporters are buying futures for taking delivery from exchange to meet their orders which might support the prices.

Kerala sales tax department has tighten the transport of pepper to other states thus arrivals are remaining limited at spot market.

As per data released by Spices board, pepper exports during April- January 2010-11 stood around 15,700 tons down by 7% compared to same period last year.

According to derivative analysis, prices are falling while volumes and open interest are rising. If prices are in a downtrend and open interest is on the rise, chartists know that new money is coming into the market, showing aggressive new short selling. This scenario will prove out a continuation of a downtrend and a bearish condition.