PEPPERTRADE SPICES BOARD BLOG #Pepper #Spices: VIETNAM SPICES MARKET UPDATE 15th MARCH 2021

PEPPER;

In February, Vietnam exported 13,428 tonnes of pepper, with the export value reaching 38.92 million USD. Compared to the previous month, the export volume decreased by 20.5%, the turnover decreased by 20.1%. Accumulated in the first 2 months of 2021, Vietnam exported 30,291 tons, worth 87.56 million USD. Although pepper prices have increased rapidly, the export quantity and export turnover of this commodity has decreased sharply by 21.4% (quantity) and 25.3% (export turnover) in the same period last year.

Last week, pepper prices continued to rise sharply with an increase of 20% in just 7 days. Especially, there was a day when the market increased and decreased with an amplitude of 12%. (On March 8 - March 9, after a hot increase of 12%, it decreased to 12% in just 24 hours, then continued to increase strongly again.).

Within 1 month (from February 17, 2021, to March 14, 2021), the price of pepper has increased by 40%.

Please refer to the following chart;

The market rose so hotly that manufacturers/exporters had to come and meet together from Friday last week to analyze the main reasons that have strongly impacted the market during the past time. The main cause as well as we have sent it briefly to you in the last week.

"Re-quoted - market update week 10th as below"

Despite being in the harvest season, raw material prices continue to rise steadily due to the following main reasons;

- Many farmers are at a loss even at this price due to having a poor crop, almost all consider storing pepper. Farmers and domestic agents prefer to sell other agricultural products like Coffee to cover temporary costs and store as much as they can. From their perspective, pepper is the most attractive to invest in compared to other agricultural products. Some rich farmers even buying from others to stock continue.

- Pepper's price is at an attractive level has stimulated many exporters/domestic agents to buy stocks. Especially, there are large enterprises with FDI capital actively participating and pushing the market up sharply in the last time. Pepper harvesting fully swings in all areas in Vietnam however it is not easy to buy in bulk.

- China and Domestic speculators buying very aggressively after Lunar New Year. Demand coming from Middle East/India for March/April shipment. USA customers are more interesting to cover full-year shipments but processors/exporters hesitate to offer further shipments.

- Several exporters are big short and have been buying raw material in secret in order to ensure shipment on time to the buyers.

Regarding price's flowchart from 2010 - 2020, we can see that pepper prices of 2021 go against most of the previous years when increased rapidly in peak season (quite similar with price fluctuations in 2011 - 10 years ago). Prices increased continuously which surprised all producers, exporters and importers. Currently at this price level, some farmers have become profitable, last week quite a lot of farmers in the Central Highlands provinces actively hired many workers to harvest quickly and sell to domestic agents when the raw material prices reached their expectation.

With the large amplitude increase and decrease and dependence on speculation (farmers / domestic agents / China/traders), we think that the market is at a rather high-risk level. Therefore all the relative parties (producer/exporter/buyer) should be careful when entering the market. (Although in the medium and long term, we think it is still uptrend)