Indian Pepper Mart Heading For Serious Trouble

Mumbai / The indian pepper mart is heading towards deep crisis in the next eight weeks unless export orders doesnt come to india or the exagerated 50,000 mt domestic consumption is not really there but instead still in the high 30 K . India onetime the worlds largest producer and exporter besides the largest consumer of black pepper has been becoming a net importer since last year with local indian farmers who do not want cash as banks dont accept cash without getting satisfied with the source of the money are better off keeping their produces under their beds rather than selling it and holding on to cash which they have no space to park. This years bull run has replenished the stocks in the National Commodity exchanges and warehouses of cash rich people who has invested in pepper mainly in the physical stocks of the exchanges. Now that the six monts maximum validity for tendering deliveries in contracts are getting expired in nearmonth October and November contracts for more than 3000 mt everyone is quizzing how this situation can overcome with no export orders since last eight weeks from industries who require pepper for winter and christmas/Newyear blend requirements other than from overseas traders who were playing with the market and currently struck not knowing what to do with the pepper they have covered thinking all others were short and will come to cover for their requirements. we have seen major exporters tendering physical deliveries in the last two expiry contracts are really eyebrow raising with the kind of volumes they do on exports and top of that delivering in the domestic pepper exchange . Although the total stock with the Comexes is only 4300 mt which is just 15 days export of Vietnam but it is too high for Indian exports of just 1000 mt a month on an average this year and most of it is imported pepper reexported.


According to market sources, there is a propaganda amongst some leading traditional pepper traders that the quality lying in the comexes warehouses are substandard and inferior and that is the reason why exporters are shying away from taking physical deliveries . On maturity in the contracts of National Exchanges.99% of the longs during the teure of the contracts are held by people who do not want even 100 grams of pepper for their use but accumulated positions purely for speculation only on buy calls by new born analysts in various leading commodity broking houses who are making charts and make calls for their livelihood against all fundamentals of the market and many times even do not know how to advise clients to exit once they are in the vicious circle .

The indian pepper futures as expected hit the 4% circuit down limits today the first day after maturing of september contracts with 341 mt spot pepper being picked up by couple of exporters who had little commitments and inturn was delivered by the National Cooperative and hedgers who wanted to free their money with the carry becoming neglible these days .

Indonesia the current cheapest ASTA Black pepper source has reduced their prices to usd 1.96/1.98/lb cfc 1.5 ny where as indian mg-1 asta prices despite todays 4% circuit down limits is usd 2.10/lb cfc 1.5 ny for nearby shipments. Vietnam prices were stable with origin shippers quoting usd 4050 pmt fob HCMC for 500 grams/litre pepper and usd 4300 pmt fob Hcmc for 550 grams/litre pepper. Where as brazilian ASTA pepper has come in line with the Indonesian ASTA pepper prices but the fact is it has become hard to find buyers globally for pepper currently.Indian domestic market is looking for marriages which happen every other day and festivals which are coming only in the second week of November as during marriages and festivals indians simply use plenty of pepper to make the pepper growers happy besides Commonwealth Games beginning in October which will halt the truck movements to and fro from Delhi.



Jennifer Larive/21 SEP 2010 21-30 HRS IST