NCDEX Pepper Tumbles On Sluggish Physical Demand: April 24, 2012

Fragile demand from the overseas and domestic buyers led spot prices to remain steady throughout the day and settled 0.27% higher on Monday. Pepper futures, however, witnessed selling by the market participants and settled at the lower freeze of 4% yesterday. 

There are reports that production in Vietnam, the largest producer of the spice, is expected to be revised to 1.35 lakh tonnes as compared to earlier estimate of 1.10 lakh tonnes. Total cash margin of 15% on the long side will be imposed on all running contracts and yet-to-be-launched contracts in pepper from April 03, 2012. For detailed reference please refer to the Circular No: NCDEX/RISK-017/2012/120. 

Exports 

According to the Spices Board of India, exports of pepper during April 2011-January 2012 rose by 49% and stood at 22,300 tonnes as compared to 14,950 tonnes in corresponding period last year. Month-on-month rise in the exports of pepper stood at 12%. 

According to Vietnam Ministry of Agriculture and Rural Development (MARD) exports of black pepper in 2012 are forecasted to fall by 30 percent to around 86,000 tonnes. Vietnam shipped a record number around 17,000 tons in March alone, against some 14,000 tons in March 2010 and 15,000 tons in March 2011 (Source: Peppertrade Board). 

Pepper imports by U.S during April to November 2011 surged marginally by 1.58% to 64,276 tonnes as compared to 63,274 tonnes during the same period in 2010-11. Indonesia remained the major supplier to the U.S. in the above mentioned period. Exports from Indonesia posted significant decrease of 42% as compared to previous year. 

Exports stood at 36,500 tonnes as compared to 62,599 tonnes in the last year. During 2011, Brazil exported 32,676 tonnes of pepper a rise of 6% as compared to 30,786 tonnes in 2010. U.S. remained the major destination of the pepper imports, importing around 12,820 tonnes. 

Production And Arrivals 

Arrivals of pepper in domestic market stood at 24 tonnes while offtakes were 22 tonnes on Monday. Global pepper production in 2012 is expected to increase 7.2% to 3.20 lakh tonnes as compared to 2.98 lakh tonnes in 2011 with sharp rise of 24% in Indonesian pepper output and in Vietnam by 10%. 

Pepper production in Vietnam and Indonesia is projected at 1.10 lakh tonnes while that in Indonesia is projected to be 41 thousand tonnes (Source: Financial Express). Domestic consumption of pepper in the world is expected to grow by 3.03% to 1.25 lakh tonnes while exports are likely to grow by 1.48% to 2.46 lakh tonnes in 2012 (Source: Peppertrade Board) 

On the other hand, production of pepper in India in 2011-12 is expected decline further by 5% to 43 thousand tonnes as compared to 48 thousand tonnes in the last year. Production is lowest in a decade.