The Hindu Business Line : Spot pepper prices down on early Indonesian harvest

EARLY harvesting of pepper in Indonesia has adversely hit Indian pepper contracts for June. However, distance positions have shown an increase. Speculative activities in the domestic market have kept the spot prices low between Rs 8,100 and Rs 8,200 a quintal.

Spot prices during the weekend were Rs 8,200 for MG 1 garbled and Rs 7,800 for ungarbled per quintal as against Rs 8,100 and Rs 7,700 respectively the previous week.

Future contracts were for June Rs 8,400 as against Rs 8,375. July Rs 8,400 (Rs 8,250), August Rs 8,400 (Rs 8,250), September Rs 8,450 (Rs 8,250), October Rs 8,655 (Rs 8,425) and November Rs 8,450 (Rs 8,250) per quintal.

There was restricted activity for nearby positions as Indonesian crop had entered the market early, Mr Kishor Shamji, President, India Pepper and Spice Trade Association (IPSTA), told Business Line. He said instead of mid-June, harvesting had commenced four weeks ahead and they were being offered at $1,500 a tonne. Malaysia, which was offering at $1,550 per tonne, had already marketed 50 per cent of its production, while Vietnam 75 per cent was traded at $1,350 a tonne. India was offering at $1,700-1,750 and ``we are outpriced. Some buying interest is likely to come in the coming weeks but that also depends on the arrival of Brazilian pepper''. If they also start early harvesting, that would dismantle this expectation, he said.

He said unlike in the past there had been a resistance from farmers. They did not want to sell below $1,500 a tonne, he said. ``If we were to maintain our presence in the international market our price should also come down to this level''.

He said the domestic oleoresin industry was importing pepper from Sri Lanka at above $2,000 a tonne. This was immature pepper of special quality available there. At the same time, the normal quality pepper in Sri Lanka was sold at $1,350 a tonne. Mr Shamji said if India developed this kind of variety, it would supplement the income of the farmers who could then sell the normal pepper at international parity.

According to him, the domestic demand was slowly picking up on speculative activities by upcountry traders. But most of the buying activities had been shifted to the primary markets leading to a drop in the arrivals at the terminal market.

Ever since the decision of the Government that both the buyers and sellers should be registered traders and must use C Form and F-Form, buying by upcountry traders from registered dealers here has substantially declined. ``It has affected the genuine dealers,'' he pointed out. Most of the North Indian dealers, engaged in pepper and spices business, were not registered traders due to higher rates of taxes in those States. Therefore, they wanted to trade with such counterparts here in the primary markets, he said.

In fact, domestic demand was by and large met by supplies from the Kodagu region of Karnataka, Wynad and Idukki districts of Kerala through illegal routes.

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