The Hindu Business Line : Pepper futures witness sharp fall

The scenario
On NCDEX, March contract fell by Rs 223 a quintal to close at Rs 11,686 on Monday from Rs 11,909 at last weekend close.
On NMCE, March contract declined by Rs 113 a quintal to Rs 11,075 from Rs 11,188.

Kochi March 12 Pepper futures market witnessed a sharp fall on Monday as a fallout of the prevailing warehouse problem and the consequent financial crisis in the last month of the financial year.

Added to this was the inferior quantity of the goods held by one of the exchanges, which offered the commodity at a discount.

On NCDEX, March contract fell by Rs 223 a quintal to close at Rs 11,686 on Monday. The drop in other contracts was from Rs 230 to Rs 283 a quintal.

On NMCE, March contract declined by Rs 113 a quintal to Rs 11,075. The fall in other contracts was from Rs 114 to Rs 250 a quintal.

The total turnover increased by 13,099 tonnes to 19,311 tonnes on Monday on NCDEX, while on NMCE it moved up by 221 tonnes to 2,248 tonnes.

Open interest

The total open interest on NCDEX went up by 22 tonnes to 29,610 tonnes. However, March position fell by 849 tonnes to 6,512 tonnes, while April moved up by 311 tonnes to 12,011 tonnes. On NMCE, total open interest declined by 123 tonnes to 5,043 tonnes. March position dropped by 243 tonnes to 2,029 tonnes.

Spot prices also declined in tandem with the futures trend by Rs 100 a quintal to close at 11,100 (un-garbled) and Rs 11,700 (MG 1) on Monday.

The fall in prices was without any changes in the fundamentals, they said. Surprisingly, the arrivals at the terminal markets have totally dried up this year as a result of alleged transportation of the commodity directly from the primary markets via Tamil Nadu and Karnataka evading tax to north Indian markets to cover good domestic demand, market observers told Business Line.

Vietnam with over 50,000 hectare under pepper produces over one lakh tonne of pepper a year and about 95 per cent of it is exported.

Vietnam said to have quoted 500 GL at $2,330 a tonne (fob) on Monday.

On the other hand, the output this year is less and as a consequence tight supply position also exists, they said.

Meanwhile, the Chairman of Vietnam Pepper Association was quoted by Vietnam News on Monday as saying that the total pepper out in that country this year could fall by 10 to 20 per cent and consequently its exports could fall by "as much as 10 per cent".

He has attributed the decline to the El Nino effect, which might cause widespread drought across Vietnam's farming regions. Besides, improper cultivation of pepper vines and overuse of fertilisers would contribute to the drop in output, he said.

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