WHO PLAYS (GAMBLES) WHOM ?

Pepper - The Trigger of the Bull run
2009/08/15


The last July 30 an article was published by VietNamNet Bridge , distributed to and re-published by several specialized media, including Peppertrade Website under the original title " Vietnamese pepper exporters sell them cheap".
According many analist the publishing of this aritcle may have triggered the market rush which drove to extreme prices volatility that marked all this week.
Among other bombastic afirmations the article mentioned that VPA Board has predicted that pepper prices would reach U$ 5,000 pmt until the end of the year and suggested exporters to control the sales in order to increase the prices.

Immediately after this publication went out, the VPA board issue a note contesting the facts and the terms of such article, deniyng as false all the infomations of the said article which Peppertrade also published. Unfortunately this Contesting Note did not received the same attention from other media.

Now we got to learn the original report issued upon the meeting of the Executive Board of the VPA held for the evaluation of the first semester of 2009, futures plans and actions and other administrative issues.
The whole document is extense and some parts of it are internal administrative questions, and for that reason we publish only a part of it under the sub-title:

Forecast for the entire months of the year and some key matters

No panic trading in spot pepper

2009/08/14


JLR
KochiAugust 14, 2009
The futures market of black pepper does not move in tandem with the real market parameters as there is no panic trading in spot even after futures prices collapsed heavily by almost 10% in 3 days and slightly recovered today at close of business.

Difference between September and indicative spot farmgate pepper prices are still greater at around Rs 800 a quintal according to India Pepper and Spice Trade Association who still dictates spot prices to all media since decades.

It is the low stock in the country that seems to determine the course of action in the market rather than speculative trading in futures.
It is because of this, there are nosellers even after the prices plummetted heavily in 3 trading sessions.
India is no longer a major global player, thanks to low-stock and theLicenced casino Ncdex.The country commands a stock of around 10,000 tonnes which can be consumed domestically during the winter season. But the ongoing bear phase in futures trading has badly hit the domestic demand, said traditional pepper traders of Wyanad and Idukki.
The trend caused a slowdown in the demand from upcountry markets for the time being but market sources expect an improvement once the prices stabilised.

Meanwhile Vietnam which opened today their 500 g/l trades @ usd 2450 pmt have traded it late in the evening to as high as usd 2600 pmt fob hcmc for prompt shipments.
No news from Indonesia today as they are carefully watching the movement and brazilian pepper prices are steady unchanged.

What we lack is consumer buying in india as well as from overseas and the bull rallies will sustain only if that happens according to Mr Jojan Malayil Vice Chairman All India Spices Exporters Forum.

Jennifer LaRive

Re: Are The Bears Back ??

I don't think the pepper market is going to be in bear hug again but a much awaited correction especially the cheer leader Indian Ncdex and the followers in other producing countries who ran their prices much faster than a bullet train not allowing anyone to get in and get out.. There is still lot of buying needs to be done from now to the Vietnamese crop so buyers will be stepping in any moment as they have realized that the pepper prices are not going to go back to usd 2200 fob levels for this year any more.

With Vietnam shipping 85000 mt of current crop as of 10th August and 5000 mt through border trade balance remaining according to VPA estimates is only 5000 mt but the quantity lying in Vietnam will be the tune of 30000 mt including stocks imported from Indonesia to Vietnam ( 3000 mt ) and already committed stocks till the end of the year.. How much of this is going to be available for exports before the new crop is one thing should be closely watched. No one knows even the Indonesians themselves how much they produce and how much they export and what is the carry over ?? Always a million Dollar question !!!!Their exports to USA alone in the month of may or rather arrival of pepper into USA in the month of June were 2,464 ton !

With sales done for June thru sept to USA India and Vietnam mainly the balance available for sales from Indonesia will be maximum from now and new crop according to our friends in Indonesia will be only 5000 mt .The pressure from there also will be very minimal. India will come once in an year for a day or a week showing attractive numbers but suddenly vanish from the scene. Buying at dips recommended for sept and oct shipments as prudent and patient traders will wait for Brazil to come with their crop in the next 8 weeks.

Received from "Anonimous"...

Are Bears Back???

It was last Saturday of July 2009 when a report from US renowned broker was sent to the spices traders all over the world.

But this time it had something special, good news for pepper sellers.

The report really made everything active.
The buyers started writing emails, short messages and phone calls to the origin sellers.
Consequently on Next Monday there was a surge for usd50-75/mt in Vietnam.
But the activitiy was not abnormal throughout the week.

In the meantime an unauthenticated report was published in a Vietnamese paper claiming that VPA has advised the exporters not to sell pepper at the current levels and the price might touch usd5000 in last months. They also mentioned that top ten Vietnamese exporters had decided to hold the goods and they got support from a consortium of banks.

The articles contents were not at all logical and it seems that it was published by some people having interest in bullish market.
At the same time Brazilian crop size was re estimated and figure was down sized. Indian players became active and they told that lesser monsoon rains could affect pepper crop in India. It made exchanges highly active and the speculators started pushing the prices on minutely basis.

These all factors were enough to make market crazy.

The buyers started chasing sellers on last Monday and it continued till Monday 10/8.
Origins increased prices on hourly basis. On Monday 3/8 the price for FAQ 500g/l was usd2300 fob and touched usd2600 on Friday.
Friday evening the packers and farmers thought that it was not useful to sell pepper as every day its price was increasing, so they finally decided not to sell.
On Saturday there was very tight position and pepper buyer was chasing the suppliers and they were getting the responses NO PEPPER IN VIETNAM,NO OFFER,FARMERS NOT SELLING, etc etc.

Surprisingly we received a call from a big supplier from Vietnam offering usd2600 fob.
As per our experience this type of call like: One of our supplier needs money that’s why he is selling at lower level: has definitely something wrong means sign of bearishness.
We though that the market will loose momentum on coming Monday. But our guess failed and on Monday 10^th of August there was huge upsurge in the price and people started asking usd2950 fob, most of the sellers were not offering. It was really a big shock for the buyers who were waiting for the market to come down and had not taken the positions.
It was also worrying the people who had confirmed at lower levels and had doubts for default.

But Tuesday 11 Th August proved that it was the climax of the drama and 33% upsurge just in two weeks was not a joke.
The price was down by usd200-250/mt and many exporters were calling to say hello hi and were eager to sell. Vietnam market for FAQ was usd2650-75 again.
We think people paid attention to the VPA statement that Vietnam had 25000 mt in hand till the new crop 2010 enters the market. They totally denied the contents of the article published in Vietnamese Paper citing VPA.VPA predicted the prices at the current levels or there might insignificant upsurge in coming days.

Now the question is what’s reality? Why the prices became so high and in such a short time and what’s the possibility in coming days? Is the trend starting on Tuesday a mere profit taking, a correction or the time for bears to dance?

Though it’s a difficult question but if we see supply and demand situation and other factors like crop’s delay in Brazil, Vietnam new crop’s time and relatively thin stocks there, uncovered big buyers in US, the word Correction best suits the situation. The market behaved in abnormal way last week and there was a price surge of 100 or even 200 and 300 usd leaving a gap which must be filled before the next Bull Run.

Muhammad Asif Qureshi

Dynamic International Traders

Pakistan.
asifq82@hotmail.com

J La Rive "Pepper prices due for correction"

Black pepper prices which started moving from 30th July took a breather today in India which was immediately followed in other producing origins as the cheer leader India after the sprint started panting a little.

In less than 30 minutes the Indian Casino which trades pepper hit the bottom circuit level the enthusiasm of the bulls dropped suddenly.The market took pause in 2 stages of the rally at 138 and 145 but the expert opinions of new generation research analysts( some of them even has not seen pepper ) at major commodity broking houses continued to give buy calls giving higher targets for sept contracts. Since the demand was very weak from inside India and from overseas the spot prices did not move in the same fashion in which the future deliveries moved up.The investors were getting Indian rupees 8 to 10 per Kg as spread between spot and sept future delivery prices. Close to 1000 mt pepper suddenly got hedged in the exchange from stockiest and farmers who have been waiting for almost an year to sell and been expecting this levels.

When India dropped usd 100 pmt in the licensed Casino without any drop in the spot market the drop in Vietnam was used 250 pmt on shipment prices and used 200 from Indonesia and usd 100 from brazil.The markets in all origins were moving up sharply without any Business worth mention its for sure that the markets are going to crack and break.There were more talk than actual business although an American broking house and a European broking house were adding fuel to the fire with presumed trades being reported.

This market is due for a correction of 10-%in the coming days itself as in India they are nearing the maturity and closing out of August contract as speculators dont take physical deliveries besides lack of export demand and indian domestic demand.

But one shouldnt take it lightly after the correction as we have seen prices zooming without any buying support other than the faq grades from Vietnam from Middle east and Africa. So if the actual demand which is expected to come after summer holidays of both Europe and America, where are these prices going to hit usd 1.75/lb or usd 2.00/lb??

Lets wait and watch patiently

Best Rgds

La Rive ..

PEPPER - SWEET MEMORIES

Weekly Highlights
2009-08-10

Remember last monday ?

"2009-08-04
Market in Brazil today was extremely firm with enquiries poppin in and some trades done reported at 2,550 fob for ASTA."

Well, today Brazil sold reportedly BASTA to US at $ 2,960 pmt And US roported also purchase from Indonesia at $ 2,900 pmt FOB
Other price indications were reported as Vietnam 500 gl up tp $ 2,750 and 550gl up to $ 2,880. Brazil was asking $ 2,750 for B2 and $ 2,850 for B1 while India was said to reach the level of $ 3,300 for MG1. Non-stop breathless climb. Acording some american observers it seems that buyers are supporting this move upwards by purchasing even as quietly as possible some quantities needed for coverage. If this is true it might be considered that the pace is consolidated. For that purpose we publish a note today, about an European report.

Coming back to last monday: $ 400 pmt in one week ! - not a bad deal.

Sweet memories...

J La Rive discuss teh article "Pepper ends the day extremely firm"

Please find below some comments on selected points of the article Pepper ends the day extremely firm published below

ARTICLE: Pepper ends the day extremely firm here in India with prices soaring to a 12 month high.
COMMENT: Yes True

A - Markets moving on bullish fundamentals and higher outside support, spill over strength from other commodities apparently lending very good support.
C - Market moving only on speculative buying in the Ncdex and there is virtually no internal or external buying support. Spill over from other commodities yes because the platform is designed as a casino.

A - The charge in pepper is led by the lack of sellers on the spot market which continues to spiral on the back of very firm future deliveries and very good buying interest.
C - There are sellers in spot market and takers are very few other than investors who are buying spot and selling future deliveries at a killing differnce from spot to future sept deliveries.

A - Prices on the future deliveries hit the 3 % circuit and closed at the day’s high.
Tight supply conditions continue for spot pepper which is being sought after by domestic traders in particular.
C - There is Plenty supply now as the prices have moved up and it will continue for some more time as many traders and stockists who were caught with inventories between inr 135-140 last year are coming out to get rid of the stocks and convert into Cash

A - Lower volumes in trade hitting the spot scene with most traders not excited with the rise in prices, since much of pepper has already been out of their hands as of now.
Higher markets from other origins act as a spark to fuel the upward surge
C - For how long ? as speculators wont pick up physical deliveries and next week itself we will see a big sell off and prices dropping like 9 pins

A - Indian MG I ASTA grade parity at $ 3100 / 3125 PMT FOB Cochin
C - But who cares indian parity ??

Rgds

La Rive