Pepper Mkt overview

Pepper Price is set to hit another round of bull-run in the next few days due to sellers’ mostly cutting supply in major producing countries. According to our analysis in major consuming countries carryover stocks are fast getting depleted with limited scope for ready replacement.

Over dependence on single source for quite sometime is the main reason for the present predicament. Buyers from all over the world had an opportunity to contract quality Malabar pepper at reasonable levels of U.S. $1.2-1.35 before the bull run started in right earnest. Exporters in India were in a position to deliver substantial quantities due to the huge turnover in commodity exchanges. Average turnover in these exchanges is around 60,000 mt with the near month contracts always having good liquidity.

The situation has undergone a major change as the largest producer and exporter opting for a staggered selling strategy by holding on to stocks. This has created a new situation for global pepper industry and in this scenario commodity exchanges in India are fast turning out to be brand ambassadors for Vietnamese pepper growers and sellers.

Several investors with backing from funds are now involved Malabar pepper India’s commodity exchanges and the next month contract is having a premium of 40%. Exporters of black pepper from India are doing more deals in these commodity exchanges since February as they are assured of high returns without the hassles of shortage in weight, light berries, excreta presence etc. Exporters also receive the payment as early as 48 hours. Buyers need to come with innovative ideas to deal with the new situation as exporters from India are not having any compelling reason to chase buyers.

According to our analysis coming two weeks will be very interesting to watch . So wait and see what’s going to happen in black gold in the next fortnight.

Best Regards

Jojan Malayil

Pepper Price to go further up

Gentlemen,

Re your "vernoticia" report dtd 2007/04/17. Please note from our view point:

1. Brazil is unable to offer easily, because the remaining carryover is too reduced and growers thinking very high prices henceforth, i.e. R$10,00/kg, which means, abt USD5.000/ton at growers.

2. Growers seeing a new crop 2007 very small, so, they prefer await elsemore.

3. Vietnam has just jumped up from VND44.000/kg to VND49.000/kg and who knows tomorrow or a little more ahead it will achieve?

As far as everybody are concerned, upon Asta meeting time, all the world trading has a stopover.

Best rgds
Nonato Moreira
President - ABEP

Black Pepper 2007 Preview

The 2007 new crop of black pepper from India looks not so promising for domestic traders and exporters with diseases taking its toll on number of vines. Farmers also have not taken proper care of the crop due to the unremunerative prices and high wages. Farm gate wage of worker is almost U.S. $ 6 per day in india besides the cost of land has become so prohibitive for cultivation.
The crop in Karnataka, which in the recent years surpassed the biggest pepper producing state Kerala, is alarming. The southern part of Coorg may have 12,000 mt while the northern part comprising the major growing areas in the state output is likely to fall to 8,000 mt from 20,000 mt last year.
The major producing areas in Kerala, Idukki and wayanad are also expecting much lesser crop and the only promising area this year is the plains where pepper cultivation is scattered in many small holdings. As of now the Kerala crop will be only 25,000 mt while in the neighbouring state Tamil Nadu Gudallore appears promising with 4000-45000 mt. However Pattiveeranpatti, the other major production centre in TN output may stay flat.
We expect farmers to hold most of the stocks in 2007 due to the good amount of iron stocks lying in northern India and heavy selling by farmers at the recent bull run. In all probability 2007 is going to turn out as an year of expectation for pepper farmers as we have seen the 10 year cycle performing very well with regard to prices from 1957 till 1997.
With producing countries Malayasia and Indonesia slowly going out of pepper cultivation and the entire world relying on one producing nation Vietnam who are yet to learn the way of holding stocks like Indian and Brazilian farmers, 2007 will be very interesting for pepper growers, traders, exporters and importers. Apart from Vietnam the other pepper growing countries are rapidly developing economically, which has pushed up the labour charges. The fertility of the soil has fallen sharply leading to complacency in replanting and proper farm-care for current holdings.
One should not forget that India still has 35000 mt of pepper stocks lying with farmers, traders and commodity exchanges of which 20000 mt will not be shown to the world as Black gold has really helped the farmers and traders in the past. The present activities in the national commodity exchanges where they trade 35000 mt on an average can influence the pepper market to a greater extent in the coming days.
Best regards
Jojan

CLOVES UPDATE

Hi,Any report about Madagaskar cloves??
Singapore traders are turning bearish on cloves from Madagaskar.
Current price;Indonesia Cloves (Lal Pari) good quality USD 4600 ex. Singapore warehouse Madagaskar Cloves around USD 4000/4400 depending on quality.
Will appreciate update on my gargram@gmail.com
CheersRam GargPaaram
InternationalMobile: +65 91012520

PEPPER MARKET - WHY SO VOLATILE ALL OF SUDDEN

The 37th IPC meeting held earlier this September in Sri Lanka has come to a conclusion that a general global decline in pepper production should be expected in in 2007.

This conclusion justified the bullish market trends. Actually we´ve witnessed a long time orchestrated efforts for market recovering from a 7 years long depression, since Vietnam decided to invest seriuosly in the pepper industry.

In the chart below we may see the prices /production behaviour before and after Vietnam entering the world market.
In few years Vietnam became the biggest and the cheapest producer and exporter responsible for half of the pepper in the world.

This brilliant strategy gave the market a long time not seen stability even at low prices and made most of the competition to become less atracted by this industry searching alternatives crop that would pay better pricing.

Once consolidated his placement in the market Vietnam authorities improved programs targeting a better pay-off for its pepper plantations improving quality and value-added products like the white pepper.
It also worked, helped by a favourable world dituation and in the year of 2006 they conquered the American market. Not only this but Vietnam priviledged situation attracted some big international players who installed trade points in an atempt to somehow control the market.

Analizing the chart above we may notice that for the last 20 years the international prices and the world production had inverse simetrical path which is absolutely normal.
Unfortunately we do not have figures for the international trade before 1997 ( in green).

Nevertheless 2 things are evident:

1- The trades are always less than production which may be justified by local consumption and carryover stocks. If the green line would be sometime above the blue it would mean that carryovers are consummed and a potential shotage is created, which is not the case in recent years.

2- A big carryover stock was created during the last years, particullary since the year of 2000 when Vietnam begun to strongly improve its production.

Actualy just analizing this chart wouldn´t give any plausible reason for the sudden rise in prices that happened in July 2006 cause all the other parameters continued their path steadily.

India has a huge internal consumption a highly developed trading system and exchange trades. The futures trade
as we commented before are not always used by the real pepper dealers. If you put toghether several factors that may justify a mass cataraze it can explain the creation of an uncotrolable movement towards an objective - in this case the prices rise.


It is evident and legitimate that producers want to get better prices for their work. If this wishfull thinking perceives some other facts that may support it and the response from other parties begin to happen, than it is a snowball and an avalanche - no one can stop it till it gets to the crossroad.
And in this case the crossroad is: Will prices be sustained ?

My hearty congratulations to you...

Dear Michail

My hearty congratulations to you for sharing on your thoughts on black pepper.In fact you have come out with the actual thought of pepper exporters, pepper traders and people who are connected with pepper from india i must say.Actually they are in a situation where they have no role to play where it is controlled by cartels and operators who may have not seen pepper at all.

I an sure that out of india most of the contracts which was done for june,july, august and september shipments are in the range of usd 1600 and usd 1800 pmt cfr ny and Losnageles. May be one or two parcels of usd 1.00/lb may be there but since last two months we being one amongst the first three exporters have not seen any buying interest at all from usa or europe because of the very high prices.
The exporters here are happy in one way,they can still buy farmgate at current levels and export it to the warehouses of public pepper exchanges without any problem realising quick cash flows and dont have to wait for months to get the export freight subsidy from government.
But other producing country exporters they have only one alternative either perform and loose heavily or default.What i would suggest is to approach government of india through IPC and start an international exchange for pepper in india so all concerned in the trade can hedge or play games or whatever they want to.
Take care
Best regards

Better stay away from the market rather than swimming against the tide.

Dear Sir,

There is a basic economic reason for the market to move up.The demand for the second half of the year is exceeding supply.
That is why the market is showing strength.It has moved up faster because there were some smart businessmen who understood the scene and made money out of it.
If sellers can take a bearish call and sell for the crop which is still to come,why cant any one take a bullish call?
Hoarding and selling in advance are part and parcel of our business.Everybody is into business to make money right?
It would be best to stay away from the market rather than swimming against the tide.

Thanks.....
Regds,