The question of the moment is the Price
All the people involved in spice trading or even need to know what is this year trend for Pepper.
We just got a report from one of biggest world spice trade players whose point of view may bring some answers.
Market will remain at pricing level for raw material between 62,000-67,000 VND/kg from Q1-Q2 and will slowly move upward into 75,000-80,000 VND/kg by Q3-Q4.
We suspect prices we are seeing this year will be the lowest. Next four (4) years cycle might lean into an upward trend from the current levels.
Pepper price hit a 10% increase in pricing since the beginning of this year.
Lowest level was seen at 59,000 VND during January month and had crossed over the highs of 69-70,000 VND marked during February month.
Overall, we see indications suggesting bulls having a strong advantage over bears
------------------------
The Bearish Indicators
• Higher interest rates means higher storage cost which tampers buying power.
• Brazil crop news will probably be a decisive moment. If crop is big, it will supply Vietnam and rest of the world.
• Economic situation worldwide is not satisfactory which may reduce imports.
• Various countries encountering devaluation of their currencies and shortage of dollars causing a eduction in imports.
--------------------------
The Bullish Indicators
• Vietnam had already finished harvesting 80% of its yield and still no hint of selling pressure from farmers’ side.
• The new crop arrival in the warehouses were very limited during the peak arrival season.
• Chinese is actively buying and will remain active until June 2023.
• The first two (2) months of the year, Vietnam have already exported about 42,000 tons. March export is expected to reach about 30,000 tons. By first half of 2023, big volume will be exported, and emaining quantity will be in strong hands.
• Exporters are not keen to offer forward positions.
• Exporters feel that the levels we are seeing now will be the lowest; therefore, not to go short will be an advantage.
• Farmers are holding their pepper goods due to the advantage of coffee and other fruits high prices income.
• Both stock market and real estate property are not doing well, causing most buyers to invest in commodities.
• Buyers’ coverage beyond June is limited; demand recovery is to be expected during Q3 and Q4.
• Pepper plantation areas is decreasing annually while proper caring for pepper vines is neglected.
• Farming input cost significantly increased which translates to higher production cost.
• Climate change is also worsening the vulnerability of farmers.
• Considering the small pricing differences between Brazil and of Vietnam, companies based in Hochiminh will probably focus on Vietnamese Pepper especially now that Sundried material is not easily available until August month.
• Early reports indicating Indonesian next crop will be small.
----------------------------
Pepper Talk: Bullish Bearish Analysis by Royal Golden © Royal Golden 2023. All Rights Reserved.
Posts
