Pepper Falls On Lackluster Global, Domestic Demand: April1 6, 2012

Lacklustre demand from the overseas and domestic buyers led spot prices of black pepper to remain rangebound and settled 0.80% higher w-o-w. Futures, however, witnessed selling pressure owing to reports of  possible strict action by the Forward Market Commission to curb excessive volatility in some of the farm commodities.    

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.   

A 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 3, 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. While exports during January 1, 2012  to February 15, 2012 stood at 6,736 tonnes up 16.3 percent as compared to corresponding period last year.

Pepper imports by US 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 U.S. in the above-mentioned period.

Exports from Indonesia posted a significant decrease of 42% as compared to the 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. The US remained  the major destination of the pepper imports, importing around 12,820  tonnes.

Production And Arrivals

Arrivals of pepper in domestic market stood at 4 tonnes while offtakes were 7 tonnes on Friday.

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

Dull demand from the domestic and overseas buyers is expected to keep  pepper prices firm in the intraday. Also, peak arrivals in Vietnam and  overseas buyers shifting to a cheaper destination (Vietnam) may also support bears in the market.