September Pepper –All set for take off ?

Karachi, September 1st, 2009
August 09 has been very exciting month for pepper market all over the world.
From July 27 till August 10 there has been only one trend and that was upward. We have read many reports, analysis and market forecasts by industry professionals. Some reports mentioned that the market is over done, some reports predicts still enough room in the room for Bull’s dance.

Let’s watch the market behavior from August 11 till today September 01, 2009.

Pepper prices started declining sharply from its peak U$D 2900 fob (Most famous FAQ Vietnam) and touched U$D 2450 in 3-4 business sessions. At this level a strong support came and lot of business was done. The prices started rising again and touched USD 2650-2700 FOB on next Monday. Market had to face strong resistance at USD 2700 FOB.
So again the market went down to USD 2550 level and then again climbed to USD 2700 FOB level on September 1st evening.

The market has been moving in a short range of USD 150 up and down after making bottom at U$D 2450 that is a sign of strength. In the meantime other big competing origin Brazil had not much fluctuations and the prices there stood more or less at U$D 2700-2800 FOB level for B1.The role of Indian exchanges can’t be overlooked now and there the price has been fluctuating in a range of 145-160 INR/KG.

Before discussing future scenario lets see demand side in the coming weeks. It’s obvious that US, the biggest buyer has yet to cover for last quarter requirements.
Europe the second biggest has also enter the market as soon as the summers holidays are finished.
In Middle East the consumption months are approaching as festival seasons marriage seasons all starts from September every year.
As per our information the stocks are not much in the consuming countries.
The biggest trader India also has to face shortfall in the upcoming crop 2009-2010 as there has been 25% lesser moon soon showers which upsets major spices crops there.

Now comes the supply side,
Vietnam the hero of the drama has in fact very very thin stocks and it has already exported 100,000 tons and it has nothing more than 10,000-15,000 mt available till Feb 2010.
If some buyers enter the market at this stage the market can shoot up just in one trading session.
If it breaks the resistance at USD 2700 next resistance might be at USD 3000 but it will be not so strong and by breaking this level definitely next stop is at USD3500.
The reports from Brazil reveal that the crop size is definitely lesser for this July/August Espirito Santo area and furthermore it’s delayed too.
The crops from Sarwak, Indonesia and Srilanka have been playing insignificant role in determining the market trend for last some years.

So by analyzing the demand supply equation one can easily guess that the pepper market might have some very exciting moments in near future.

So let’s watch.

Muhammad Asif Qureshi
Dynamic International Traders

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