Pepper Market Report Week 33/ 2021 - A report from RGT

 

FOB PRICE ©IPC

Vietnam
Price soar week 32 reaching Tuesday last week at level 80,500 VND/kg for pepper raw material.

From beginning August, raw material went up of about 8.05% in span of ten (10) days with Black Pepper that is now higher of about 4.67% and White Pepper higher of about 6% today.

Succeeding days, raw price eased and stayed stable at 79000 VND/kg dubbed for a paused in demand overseas. Firmness persists even during weekend attributed to the inventory level that is believed to be running low along with the prediction that China will resume its buying spree by August/ September to cover their deficiency from Indonesia origin.

Day trade-78,5000 VND

Afternoon-80,500 VND

Almost 2.5% intraday gain

8.05% Upsurge in span of 10 days

Indonesia
Lampung reported stable whilst Muntok White continue to be seen at an upward trend reportedly being seen traded at level highs of $7000-7300 FOB from origin.

Though other might see it as déjà vu of week 12 market bubble, it is important to take note that Muntok farmers have been consistent with their standing since week 26 for the clarity in expected poor crop this year followed by overall pepper market situation.

Brazil
Trading activity was active entire week with a good volume of demand. In fact, the splurge in demand have caused offers from $3800 FOB level to go up at $3900-4000 FOB by ending week. Compared to Vietnam, this origin was seen a cheaper alternative from last week trade off.

Though raw material was being traded last week at level 18 BRL/kg, according to sources, some farmers prefer to hold their inventory materials in belief that it could touch at level 25 BRL/kg.

Freight

Freight Situation from Asia.
A severe equipment shortage across all Asia origins continues. Though certain destination ports such as Pakistan and Indian Ports have increased 182-219% compared to last year, this year rates are noticeably stabilizing for Karachi; while for India, though seen with an increasing trend, the level is only about 20-25% upsurge from Q1-Q3 of this year.

The top worst affected major destinations are Mexico, Europe, Jebel Ali and USA showing roughly 500-977% increasing uptrend in addition to difficulty in booking a secured space.

As from Indonesia to other destination, it is even seen at its worst condition this week. Taking note that no direct routing from Indonesia port which means transshipment to other congested ports is a must, contributing to the upscale in price trend

Freight Situation from Brazil.
Spike in freight cost along with a very tight vessel and container availability started to be noticed from Brazil ports mid Q2 this year and became obviously a major concern by Q3.

No hint of warning, it took everyone by surprise with a sudden upsurge from about 280%-330% clearly seen for all America routes.

Overall, ocean freight remains bullish going forward. This is despite a reported decrease of shipments from ports under lockdown such as China, Vietnam, and Indonesia. The latter does not change that fact that freight capacity is heavily curtailed by port congestion that is not easing. Vessels and containers can be shift easily from one trade to another but port from one to another cannot.

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Recommendation

Market remains stronger than ever despite all ongoing global supply chain disruptions and headwinds related to raw material, environmental concerns, crop issues and freight cost. This becomes more evident these past few weeks that ‘bullish believer’ is now taking a stand that situation going forward for pepper could rise in coming years till abundant supply exceeds demands which does not seem to happen in next 2-3 years times. Thus, staying strategically covered at all times will perhaps be the next logical thing to do at this point in time

RGT Pepper Market Report Week 33/ 2021
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