Might pepper prices reach U$D 4,000 level again ?

Two weeks ago, around 12 April, the market semed to stop its upward path.
For around 5days the prices slided back giving an impression that international
buyers were right in their very cautious policy of wait-and-watch and buying
small and quietly just for immediate needs. However that "pit-stop" was short.
From monday 19 the uprise resumed with an ever growing strengh.
In Brazil prices rose an average of 25-50 dollars per ton per day during the last couple of days.

Are there fundamentals to support such behavior ?

It has been reported since last year that India´s crop will be barely suficient
to local needs: around 50 Kton crop for around 50 Kton local consumption.
Nevertheless India is still an exporter and bear a tradition in some markets
which allows higher prices. In February alone exports were reported at 1,500 mt.
Therefore India is an Importer this year.

Vietnam previewed a strong drop in 2010 production which is said to be
no more than 100,000 ton this year.
Presumably no carryover stocks or very limited from 2009 when exports reached a record of 130,000 ton.
However high export volumes are reported for every month and some anailst estimate that
possibly some 35,000 tons were shipped already.
Vietnamese growers sensed the taste of blood and begun to hold their produce expecting further rise in prices, at a point that some delays/defaults are being reported.
The misterious Indonesia is said to have no more than 10,000 ton left until the
new crop.
Brazil is confirming a very limited availability and drop / delay in his harvest.
Further, as traditional supplier to USA, Brazil may fulfill the american needs
for ASTA grade as no salmonela was reported from this origin.

Time Frame Factor
USA is having trouble with FDA due to recent salmonela issues which is bringing
some thightness and urgency to the market, especially if the importers were
buying cautiosly expecting prices to correct /adjust (drop).

And last but not the less important - the Ramadan hollyday - which is peak of
pepper consumption will start this year before the Indonesian and Brazilian
crops. All these factors put toghether may create a "hole" in the supply
sky-rocketing the pepper prices.

A good deal for speculators who quietly keep some stocks for that moment (if any...)



Editor Peppertrade