Pepper Weakens on Subdued Demand

Black Pepper futures continued to trade lower for the second consecutive week and settled 1.42% down w-w on account of lackluster trades at the domestic. Spot prices also remained lower due to dull activity.

However, Pepper lying with stockiests in other major producing nations particularly Vietnam and Indonesia are limited. This may control prices from falling sharply.

Vietnam has reportedly sold 1.08 lakh tonnes of pepper till September 30th 2011. Buyers from Vietnam are therefore placing fresh orders in India. Carryover stocks of pepper till commencement of fresh arrivals in March with Vietnam are projected to be around 15,000 tonnes. Also, Indonesia’s output is estimated lower. (Source: Pepper Trade Board) Indian parity in the international market was at $8,000-8,100 a tonne and remained competitive and was attracting overseas orders while Vietnam 550 Gl is being offered at $8,050 per tonne.

Exports from the major countries

According to Spices Board of India, exports of pepper during April 2011- August 2011 stood at 8,750 tonnes as compared to 7,800 tonnes in 2010- 11, rise of 12%.

According to International Pepper Community (IPC) exports of black pepper from Indonesia during January to September 2011 witnessed a sharp fall of 42.6% and stood at 19,000 tonnes as compared to 33,100 tonnes in the last year.

Production and Arrivals

Arrivals of pepper in the domestic mandi on Saturday stood at 12 tonnes against offtakes of 15 tonnes while arrivals on Friday stood at 20 tonnes against offtakes of 23 tonnes.

Production of pepper in India in 2010-11 is projected to be 48 thousand tonnes (according to the Spices Board) as compared to 50 thousand tonnes last year. However, there are expectations that this estimate would be lowered further on account of the disease attacks and erratic rainfall in the major growing areas particularly Kerala and Karnataka.

According to IPC global output of Pepper for 2011 is expected to decline by 6,500 tonnes to 3.10 lakh tonnes. Vietnam production of the spice is expected to be same as that of previous year to 1.10 lakh tonnes. Pepper production in Brazil stood around 27,000 tonnes in 2010-11 as compared to 35,000 tonnes the previous year.