Thursday, April 29, 2010

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

Dear Editor

USD 4000 for pepper will be achieved in India in the futures delivery prices but hard to achieve in the spot segment . We do not have a shortage of the spice but prices are kept by highly speculative elements in India and again followed by Vietnam for no reason but to get hurt. Indonesians continue to ignore this and go forward and selling at usd 3375- 3400 for July/August/Sept shipments and for nearby shipments Vietnam also willing to sell its ASTA pepper at usd 3375 pmt fob Hcmc. India keeping its price at usd 3800 fob cochin is holding the umbrella for other countries to get the lions share of the world market. In the past one year Indonesia has emerged as the dark horse and Villian not allowing the pepper prices to move beyond a certain level with the agressive marketing by the Bold and Beautiful there by kindling the hopes of the Indian Bulls and Vietnamese Bulls to rally the prices further. If the speculators suddenly leave the scene India will become very competetive immediately in the world market and the prospects of exporting 5000 mt to asta markets will brighten according to major players handling Indian Pepper.


What we see currently is heavy inflow of imported Black pepper from Vietnam,Indonesia and Sri lanka into Cochin in the month of april and more to come in May exporters are staying away from the spot market and some of them still buying and selling future deliveries as the arbitrage is very good .


Its true that many industries need to cover pepper for the second half of the year but are not jumping and waiting patiently to see that prices are settled and since Indonesia is already in the market to sell at usd 3375 pmt fob panjang for july/Aug/Sept shipments which is currently picked up by only Indian value added processors and other importing countries still feel the prices of ASTA pepper will drop to usd 3000 pmt


We are seeing a continued fall in Indian pepper futures and this is likely to continue as the holders are the ones who dont require a gram of pepper for their home use and the sellers are mainly hedgers who has pepper in their own warehouse or in dematted stocks of National Exchanges. Unless and until Indian pepper prices come to export parity exporters are not likely to participate and extend their hand to the falling prices in Indian pepper futures which is currently heading to Indian rupees 142/kg in the second week of May 2010 when the conttracts near for its maturity according to some major analysts

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