MALAYSIA - Pepper market slows down

 

By JACK WONG

KUCHING: Domestic pepper prices have weakened considerably this year, after 2021’s powerful rally as a result of the spice’s global oversupply.

Other key factors contributing to the pull-back in prices include the Russia-Ukraine war, inflationary pressures and the strong US dollar.

Kuching Grade 1 black pepper slipped to RM13,750 per tonne on Aug 12 from RM17,330 per tonne in December 2021, down by RM3,580 per tonne or more than 20%.

Likewise, Kuching Grade 1 white pepper fell to RM23,850 per tonne from RM26,450 per tonne or by RM2,600 or about 10% during the same period, according to Malaysian Pepper Board’s (MPB) daily published prices.

In 2021, both black and white pepper prices posted impressive gains, soaring by about 90% from RM9,050 per tonne and 65% from RM16,000 per tonne respectively recorded in 2020.

Last year, both the black and white pepper prices climbed to their highest levels in three years since 2018, but were still far way off from their all-time highs of RM30,000 per tonne and RM50,000 per tonne respectively, in 2015.

International Pepper Community (IPC) executive director Firna Azura Ekaputri Marzuki said the current pepper market continues to be bearish, as the world grapples with demand erosion this year due to “deficit changing to surplus” inventory.

Other factors are depreciating currencies because of the strong dollar, inflation and low consumer appetite.

“China has returned to the pepper market but it may not be enough to cheer markets as Brazil and Indonesia are entering harvest season for 2022,” she added in her presentation on “Globalisation and World Pepper Industry 2021/2022” at Universiti Malaysia Sarawak (Unimas) late last month.

Sarawak’s established pepper exporter Nguong Aik (Kuching) Sdn Bhd director William S C Yii said as China, a major pepper consuming country, has not fully re-opened its international borders due to its Covid zero policy, it has resulted in a cut down in imports from major producing and supplying countries like Vietnam.

“Now China is very short of pepper because of a lot of restrictions (in imports). If Vietnam exporters cannot sell to China, they have to sell to other markets, like the United States and Europe and this has affected pepper prices,” Yii told StarBiz.

Vietnam, the world’s number one pepper producer and exporter, was estimated to have exported 261,000 tonnes valued at US$938mil (RM4.17bil) in 2021. This was down 8.5% in volume but up 42% in value from 2020, thanks to strong export prices.

Year-on-year, Vietnam’s average export price of pepper products jumped 53.5% to reach US$3,757 (RM16,697) per tonne in 2021.

Yii said the Russia-Ukraine war, which broke out in February 2022, has affected demand and pepper shipments to the two countries which imported a combined 7,000 tonnes a year previously.

He said the new Indonesian pepper crop, which will come into the market from next month, might be bigger in quantity than that of 2021. This may put pressure on pepper prices as Indonesia is the world’s second largest pepper producer.

The strong US dollar, he added, is another reason for the weak pepper prices as this dampened consumption of the spice.

Late last year, Yii was bullish and had predicted pepper prices to extend their rallies by another 30% in 2022. But the unexpected turn of events as mentioned has largely changed his views on the market outlook.

“The current pepper market is very inactive and extremely quiet. Though cargo containers are now available and the global shipping freight rates have come down from (their historical peaks) last year, these are still high compared to the pre-Covid-19 period,” he said.

Frina expects the global pepper market to stabilise and prices to firm up in November and December.

Concurring with her, Yii said it is normally in the third quarter and towards the end of the year when the global pepper market is more active, with prices on the uptrend.

“If China fully opens up its international borders by then, this may push up pepper prices by 10% to 20%, from current levels. But any price spike will attract sellers,” Yii said.

On Sarawak’s new pepper crop, he said the harvesting season was just over and that it had been a “failure crop”. Yii estimates this year’s small crop production to be 10% to 20% lower, compared to the past two years.

According to MPB, Malaysia produced 31,600 tonnes of pepper in 2021 (2020: 30,804 tonnes), with Sarawak contributing nearly 98% of the country’s total output. In 2021, Malaysia, which ranks fourth among the top five IPC member producers, exported 7,407 tonnes of pepper worth RM153.7mil.

Yii said pepper farmers are hit by soaring imported fertiliser prices, which have doubled from that of 2021.

Fertiliser made up about 70% of farm inputs.

Inadequate fertilising of pepper vines will affect yields.

At current weak prices, Yii said the better-to-do pepper farmers and rich dealers are holding onto their inventories and hoping to sell at higher prices.

By JACK WONG

TAGS / KEYWORDS:

Pepper , Prices , Down ,

https://www.thestar.com.my/business/business-news/2022/08/15/pepper-market-slows-down

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IPC PEPPER REPORT No. 33/20, 10 - 14 August 2020

 

LOCAL MARKET

Market this week showed a mixed response with only Indonesia black pepper was reported with a decrease. In local market, Malabar black pepper was reported with an increase of 1% when compared to previous week at an average of USD 4,199 per Mt. Indonesia black pepper was reported with 4% deficit as compared to the previous week at an average of USD 2,026 per Mt whilst Indonesia white pepper was reported stable averaging at USD 3,478 per Mt. The decrease of Indonesia black pepper price could be contributed to the harvest season currently ongoing, thus, pushing down the local price. Malaysia black and white peppers in local market were reported stable with a marginal increase at an average of USD 2,387 per Mt for black pepper and USD 3,754 per Mt for white pepper. Furthermore, Viet Nam black and white pepper were reported with an increase of 2% and 5% respectively when compared to the previous week averaging at USD 1,995 per Mt for black pepper and USD 2,829 per Mt for white pepper. Sr i Lanka black pepper was reported with an increase of 1% as compared to the previous week and was traded at an average of USD 2,864 per Mt.

INTERNATIONAL MARKET

International market also showed a mixed response as only India origin was reported with an increase. India black pepper was reported with the same increase of 1% when compared to the previous week at an average of USD 4,466 per Mt. Indonesia black pepper was reported with 4% deficit when compared to the previous week at an average of USD 2,472 per Mt whilst Indonesia white pepper was reported steady averaging at USD 4,098 per Mt. Malaysia black and white pepper were reported stable and unchanged. Furthermore, Viet Nam black pepper 500 g/l, 550 g/l and Viet Nam white pepper were reported stable with a marginal increase averaging at USD 2,430 per Mt, USD 2,511 per Mt and USD 3,950 per Mt respectively. 

 

 

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IPC PEPPER REPORT No. 31/20, 27 - 31 July 2020

LOCAL MARKET 

As the Moslem around the world celebrates the Eid Al-Adha Mubarak 1441 H amid the global pandemic of Corona Virus, Market this week showed mixed response with a rather positive outlook as only Viet Nam origin recording a decrease. In local market, Malabar black pepper was reported with an increase of 1% as compared to the previous week at an average of USD 4,122 per Mt. Indonesia black and white pepper were reported with an increase of 8% and 5% respectively as opposed to the previous week averaging at USD 2,193 per Mt for black pepper and USD 3,426 per Mt for white pepper. The increase of Indonesia pepper could be contributed to the increase of demand as well as the strengthening of Indonesian Rupiah against US Dollar (IDR 14,593 @ USD 1), an appreciation by 1% recorded. Malaysia black and white peppers in local market were reported with an increase of 1% respectively when compared to the previous week at an average of USD 2,301 per Mt for black pepper and USD 3,655 per Mt for white pepper. Furthermore, Viet Nam black and white pepper were reported with 3% deficit respectively when compared to the previous week averaging at USD 1,970 per Mt for black pepper and USD 2,745 per Mt for white pepper. Sri Lanka black pepper was reported with a significant increase of 8% as compared to the previous week and was traded at an average of USD 2,858 per Mt. China white pepper was reported stable and unchanged.

INTERNATIONAL  MARKET

International market was reported with a more positive outlook. India black pepper was reported with the same increase of 1% as compared to the previous week at an average of USD 4,390 per Mt. Indonesia black and white pepper were reported with an increase of 7% and 5% respectively as compared to the previous week averaging at USD 2,665 per Mt for black pepper and USD 4,044 per Mt for white pepper. Malaysia black pepper was reported with an increase of 2% when compared to the previous week at an average of USD 3,609 per Mt whilst Malaysia white pepper was reported stable. Furthermore, Viet Nam black pepper 500 g/l, 550 g/l and Viet Nam white pepper as well as China white pepper continued to be reported stable and unchanged.

US market this week was reported with the increase of price of black as well as white pepper nevertheless buyers held on to source from producing origins. Muntok white pepper for CF August/September was reported at USD 4.600 per Mt.

IPC PEPPER MKT REPORT No. 30/20, 20 - 24 July 2020

MARKET REPORT
Market this week showed mixed response with Indonesia and Viet Nam origin recording a decrease.
In local market, Malabar black pepper was reported with an increase of 2% as compared to the previous week at an average of USD 4,088 per Mt.
Entering the harvest season as well as the slow demand, Indonesia black and white pepper were reported with 12% and 5% deficit respectively as opposed to the previous week averaging at USD 2,039 per Mt for black pepper and USD 3,262 per Mt for white pepper.
Malaysia black and white peppers in local market were reported with an increase of 4% and 2% respectively when compared to the previous week at an average of USD 2,275 per Mt for black pepper and USD 3,626 per Mt for white pepper.
Furthermore, Viet Nam black pepper was reported with 1% deficit when compared to the previous week averaging at USD 2,040 per Mt whilst Viet Nam white pepper remained stable and unchanged.
Sri Lanka black pepper was reported with an increase of 4% as compared to the prev ious week and was traded at an average of USD 2,644 per Mt.
China white pepper was reported stable and unchanged. 

INTERNATIONAL MARKET
International market showed a similar trend as the local market. India black pepper was reported with the same increase of 2% as compared to the previous week at an average of USD 4,355 per Mt.
Indonesia black and white pepper were reported with 12% and 5% deficit respectively as compared to the previous week averaging at USD 2,488 per Mt for black pepper and USD 3,858 per Mt for white pepper. Malaysia black and white peppers were reported stable and unchanged.
Furthermore, Viet Nam black pepper 500 g/l, 550 g/l and Viet Nam white pepper as well as China white pepper continued to be reported stable and unchanged.

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IPC REPORT - EXPORT OF PEPPER BY MALAYSIA

Malaysia, divided by the South China Sea into two regions; the Peninsular Malaysia and Malaysian Borneo, shared land borders with Thailand, Indonesia and Brunei Darussalam. Malaysia, known to be one of the major pepper producing countries in the world with pepper production estimated at 24,000 Mt in 2019, produces more than 98% of its pepper in the State of Sarawak. Producing both black and white pepper, Malaysia is reported to actively export pepper to various countries.
In 2017, Malaysia was reported to have exported a total of 20,969 Mt of pepper from which 50% or 10,484 Mt of it comprised of whole pepper and 50% or 10,484 Mt of it ground pepper. Malaysia on average exported a total of 1,747 Mt per month in 2017 which peaked in August with 2,575 Mt. The total revenue of Malaysia's export of pepper in 2017 was reported to be as high as USD 72.6 Million. Thus, recording an average price of the total pepper exported by Malaysia at USD 5,543 per Mt for whole pepper and USD 1,386 per Mt for ground pepper.
Year 2018 saw a decrease in term of quantity of pepper exported by Malaysia. Malaysia was reported to have exported a total of 13,882 Mt of which 73% or 10,119 Mt of it comprised of whole pepper and 27% or 3,763Mt of it ground pepper, recording a decrease of 34% when compared with 2017. The average export of pepper by Malaysia in 2018 was reported to be at 1,157 Mt per month which peaked in March with 1,954 Mt. In accordance with decreasing in terms of quantity, Malaysia's revenue from pepper export was also reported to have decreased by 31% as compared to the previous year to a total of USD 50.1 Million. Thus, recording an average price of the total pepper exported by Malaysia at USD 3,762 per Mt for whole pepper and USD 3,205 per Mt for ground pepper or a decrease by 32% for whole pepper and an increase of 131% for ground pepper as compared with 2017.
At the end of 2019, Malaysia was reported to have exported a total of 9,860 Mt which 87% or 8,537 Mt of it comprised of whole pepper and 13% or 1,322 Mt of it ground pepper. Thus, recording a decrease of 29% when compared to 2018. The average export of pepper by Malaysia in 2019 was reported to be at 822 Mt per month which peaked in August with 1,131 Mt. By the end of 2019, the total revenue of pepper export by Malaysia was reported to have reached USD 35.2 Million, recording a decrease by 30% as compared to 2018. The average price of the total pepper exported by Malaysia in 2019 was reported at USD 3,086 per Mt for whole pepper and USD 6,743 per Mt for ground pepper or a decrease by 18% for whole pepper and an increase of 110% for ground pepper as compared with 2018.
Pepper from Malaysia is widely traded in Asia, Europe, America, Australia and Africa. In 2019, Malaysia's top 5 Country of destinations for its pepper were reported to be Japan with 3,599 Mt (a decrease of 6% as compared to 2018), China with 1,991 Mt (a decrease of 48%), Taiwan with 1,172 Mt (a decrease of 25%), Viet Nam with 820 Mt (a decrease of 41%) and South Korea with 635 Mt (a decrease of 16%). The significant decrease of export to China was the result of China starting to shift importing pepper from other origins such as Indonesia and Viet Nam instead of Malaysia (an increase of 4,534 Mt and 2,617 Mt respectively as compared to the same period in 2019).