BLACK PEPPER OUTLOOK: MID-YEAR REVIEW 2021

The report below was published by IPC and Namagro.
We believe it is very consistent and offers a very clear vision of the market which this year due to exceptional crisis cause by the COVID pandemic is very confused. 
MW
manager@peppertrade.com.br

Summary

# Aug/Sep period is period of convergence and is the only period with stock availability in all three major origins.

# We expect markets to align close to 3700/3800 USD/MT for 570 ASTA at an FOB Level.

# We expect EU to be back after holidays and book Indonesia and Brazil. 

# USA is expected to book new crop Vietnam and Q4 shipments from Brazil.

# Chinese demand could bring a squeeze suddenly. This may not happen in the next 15/30 days as Vietnam enters severe lock down.

# For MRL pass buyers are expected to turn to Brazil due to better freight rates

# Freights from Asia to NA/EU will remain firm.

# Overall activity in Vietnam is expected to be slow as stock at farm gate is lowest as compared to previous 2/3 years . 

# Downside is Demand from ME is expected to be slow as destination prices are lower than origin price 

# Fundamentally global demand for pepper remains strong with supplies not growing.

# Therefore any softness in the market should be seen as a buying opportunity.

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Indonesia Price Outlook

Current price for ASTA Fob USD 4000/ MT
We expect prices to drop to 3800 USD/MT and align with Brazil to cover impact of freight
Slow Demand from traditional destinations will be countered by lower crop.
Unless Arbitrage improves Indonesia may not import from Vietnam.

Supply disruptions due to Covid are expected and market is inactive.
It is possible in the later part of the year prices rebound as China is uncovered and they would be aggressive in Vietnam and Indonesia.

Freights are not expected to reduce for next 3/4 months.

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Vietnam Price Outlook

Current price for ASTA Fob USD 3850/ MT
We do not expect prices to drop sharply.
Slow Demand from traditional destinations has been already factored in.
Unless Arbitrage improves Vietnam may not import from Brazil.
Supply disruptions due to Covid are expected and market is inactive.
It is possible in the later part of the year prices rebound as China is uncovered and they would be aggressive in Vietnam and Indonesia.

• The origins processors especially ingredient factories, unlike previous years, have sold for 2022 and are carrying stocks. This means farmers have sold their produce much earlier and do not have much stock in hand.
• This is evident by the fact that despite a lock down and poor fresh sales for the past 3 weeks prices of raw material is steady.

Freights are not expected to reduce for next 3/4 months.

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Brazil Price Outlook

Current price for ASTA Fob USD 3900/MT
We expect prices for ASTA Fob should drop by 10% to USD 3600/MT
Drought and low crop is factored in.

Demand from non traditional destinations like ME will remain low.
Unless Arbitrage improves Vietnam may not import.
Supply disruptions due to Covid are not expected.

It is possible in the later part of the year prices rebound as China is uncovered and they would be aggressive in Vietnam and Indonesia.

Therefore,one can wait a little for the opportunity but being too pessimistic may not be wise.