Financial Daily from THE HINDU group of publications
Wednesday, Apr 17, 2002
Agri-Biz & Commodities
Spices & Condiments
Pepper prices move up on buying support
G. K. Nair
KOCHI, April 16
PEPPER prices continued its upward trend in the terminal market on increased buying support and short supply.
Spot prices of MG 1 garbled increased to Rs 8,600 a quintal on Monday from Rs 8,100 last week, while that of ungarbled to Rs 8,200 from Rs 7,700 a quintal. Futures also increased significantly during the period.
Trade circles anticipated the prices to touch the ceiling limit of Rs 400 a quintal if the market opened on Tuesday. As banks remained closed due to a national strike on Tuesday, the market was also closed.
There was increased buying activity in the markets all over the world, market sources told Business Line. End-users in major markets, who have been postponing their pepper purchases anticipating price drop below $1,000 a tonne, have now started buying because of the current short supply. Even international players, who have committed earlier, are buying now to cover the needs. Exporters have also started buying to meet their time-bound commitments.
Arrivals at the terminal market have decreased. Some of the major growers and traders are holding stock anticipating the prices to move up further.
According to the sources, the sales from Vietnam were good. Now selling was taking place for second half of May while shipments for April and first half of May were over-committed. Vietnam has raised the price to $1,400-1,450 from $ 1,300 a tonne. Brazil and Malaysia are also offering now at $1,800 a tonne while the Indian c&f price was $1,875-1,900 a tonne.
Availability in India is also expected to be much less as the domestic market appears to have absorbed a huge quantity buying directly from the primary markets. For instance, demand from markets such as Bihar and Orissa have gone up this year because of the decline in prices.
In fact, there are no sales to these regions since pepper prices shot up to above Rs 100/kg.
This year many traders entered the market to buy pepper when its prices are hovering around Rs 6,000 a quintal.
The supply position had become unpredictable as all the projections made by the international players who had conducted surveys in pepper producing countries had so far turned out to be wrong.
Even the Vietnamese government sources, they said, pointed out that the production was to drop by 30 to 40 per cent of the previous year.
The situation in Malaysia and Indonesia was also reported to be not going to be better this year, they said.
Given this market situation with a demand growth rate of 3 to 5 per cent and with a potential short fall in supply might overturn all the speculations made so far, the market sources said.
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