VIETNAM PEPPER & SPICES MARKET UPDATE 28th JUNE 2021 - WEEK 26

 

PEPPER

 

Although the situation of freight rates and epidemics is still complicated, besides the lack of liquidity in the domestic market from exporters / collectors at different times. However, the market has had very strong gaining sessions in the past week with an increase of 4%. The main reason is that Vietnamese exporters actively buy raw material for June shipment. In addition, with a forecast quantity not less than 50,000 tons to be exported in the next 2 months, July and August, so farmers / dealer stock is now being too tight. Besides, the demand from different markets such as EU / USA / ASIA and China has also pushed up the domestic market. Thus, pepper prices in June have increased by 9.2% compared to May.

The market has gone through half of the crop of 2021 with a fluctuating but very steady increase since May. Therefore, farmers and dealers have a solid basis to believe that pepper prices will continue to increase in the second half of 2021 as different reasons that we have analyzed in the 24th week report.

 

Indonesia; The epidemic situation is still complicated and the harvest is expected to be come later than expected. Crop size is estimated to be poor and the quantity used for export in 2021 is forecasted only around 10 - 15,000 tons (Crop size around 30.000 tons max but huge domestic consumption already reached 15.000 tons). However, the situation of containers and freight from Indonesia is very stressful and it is difficult to get containers with high rates. Therefore, the price and time of shipment to abroad have not been fixed.

 

Brazil; The second crop of Brazil will start in end August / early September but quantity with max 25.000 tons. Prompt shipment still available but higher price compare with Vietnam. The Brazilian real Currency traded around 4.9 per USD in the fourth week of June, its highest level since June 2020, after latest data showed Brazilian consumer inflation surged in the first half of June, suggesting further monetary policy tightening, while the country's current account deficit was at its smallest in more than 13 years.

Therefore, it is likely that the price of pepper from Brazil will continue to increase in the near future when the local currency tends to appreciate quite strongly against the USD

(in contrast in 2019/2020).

 

With both the current Indonesia / Brazilian markets and max quantity of 2 these market for export around 50 - 60.000 tons for second half of the year 2021. The ability to import for re-production and export is not feasible in Vietnam now. Therefore, all Vietnam exporters / processors / traders will have to focus on buying domestic raw material for export.

 

 

SPOT market in ASIA & USA & EU; Material at the ports of destination continuously increase in price due to the increase rapidly in freight rates, consumption… This will also promote the price of raw materials in exporting countries to continue to firmer in the near future.

 

CASSIA/ STAR ANISE/ TURMERIC;

 

High demand coming from different countries while new crops are still in the next 3 more months. Stock being tight and price continuing firmer / uptrend is foreseen until August at least.