Pepper Sideways Owing To Fragile Demand: April 30, 2012

Pepper prices in the intra-day may trade sideways owing to fragile demand by the local stockists. There are also reports of improved imports of cheap pepper from Vietnam into India which is likely to pressurize prices. Also, expectation of fresh arrivals of pepper from Malaysia in the medium-term (May) may provide support to bears in the market.

Pepper futures prices continued the volatility on speculative activities during Saturday’s trading session. Futures started the day on positive note on short covering. Reports of exportable surplus available in India pressurized the prices. However, prices took small recovery and ended the day on a slightly positive note.

As per Angel Commodities, pepper spot prices and futures witnessed selling by the market participants owing to lacklustre trades at the domestic market and settled 2.06% and 5.09% lower w-o-w. Reports of cheaper imports of pepper from Vietnam into India also supported bears in the market.

Arrivals of pepper in the domestic market stood at 6 tonnes while offtakes were 3 tonnes on Saturday. 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.

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. Pepper prices in the international market are being quoted at $7800/tonne while Vietnam was offering its produce at $6,950/tonne.

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 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 February 2012 Brazil exported 1,679 tonnes of pepper as against 2791 tn in February 2011. Exports of pepper during January – February 2012 stood at 4222 tn a decline of 16% as compared to same period previous year.