Pepper shoots 16% on low production

KOCHI: Pepper prices have shot up 16% in the last one month due to concern that availability will be low this year. Production is less than the initial estimates in India while largest producer Vietnam is not active in the market. The spot price that ruled at around Rs 223 per kg in mid-March has seen a sharp escalation to Rs 258 per kg on April 14.
In the futures market, the May contract rose 19% during the period and stood at Rs 270.22 per kg on April 13. Domestic production was earlier estimated at 48,000 tonne but was subsequently revised to 45,000 tonne by trade and industry though there are a few traders who say that the production could not be more than 40,000 tonne.
Supplies from Kerala's leading production centres have been thin. But in the neighbouring Karnataka, production is considered to be higher this year. Despite the acceleration in prices, domestic demand has been high this season, according to Kishor Shamji, managing director, Kishor Spices. The domestic demand is around 40,000 tonne, leaving out hardly any volume for exports.
Leading exporters are offering superior grade pepper at $6,900 per tonne. The market is also worried over low supplies from Vietnam. "Prices in Vietnam are at a record level but supplies are poor as farmers seem to expect a further rise in prices," said Philip Kuruvila , managing director, Indian Products. Prices are likely to rise further due to the possibility of a global supply squeeze.
Except for Vietnam, production seems to be lower in most other origins while it is steady in Indonesia, he said. Vietnam's production is better than the last year's and is likely to be around 1.2 lakh tonne but traders expect a supply shortfall leading to speculation in prices.