INDIAN PEPPER FUTURES LIKELY TO DROP ANOTHER RS15 PER KG IN TANDEM WITH INTERNATIONAL PEPPER PRICES

The Indian Pepper prices which is currently ruling highest in the world because of its huge domestic consumption is likely to drop heavily from the second week of August according to the indications we receive from overseas markets. The neighbouring island nation whose new crop is ready has become agressive and offering its 525 g/l variety cnf cochin for august shipment at usd 3.950 pkg (Rs 185.49 per kg ) without finding buyers and same is the case with Indonesian new crop which is offered in all directions and from all shippers and resellers at usd 4.30 per kg cfc 1.5 (Rs 201.9 Per kg )New york delivered. Brazil very quitely accepting some deals for august/sept shipments on special payment terms by farmers /exporters who require cash at usd 4.20 per kg. Indian mg1 asta prices are currently the most expensive pepper quoted cfc 1.5 ny at usd 4.850 per kg cfc 1.5 Ny ( Rs 227.73 per kg ) With indian pepper futures dropping almost Rs 200 per ton from last weeks high the hunger for pepper has subsided from north indian speculative traders and they have become sellers to book their lossess in the main northern indian markets Delhi and jaipur. I do not think the current higher prices can sustain for long if no export demands coming to the country and since exporters have physical stocks which are already hedged in the exchange platform might become physical deliveries if the expected overseas demand does not show up; and this scenario will make available more stocks in the system and markets can drop substantially from current levels and move down to 190-192 per kg for nearby August deliveries according to expert analysts in the national commodity exchanges.

Global Pepper availability seen in Deep Red although Production/Demand Mismatch Minimal

Guestimates of International Pepper community put production at 310000 mt of both Black and white pepper for the year 2010 but where as realistically according to the agronomists of leading spice companies in the world the production was some where in the area of minimum 360000 mt against a requirement of 216000 mt by importing countries and home consumption from origin countries to the tune of 90000 mt. Basically there was no mismatch between demand vs supply figures but what went wrong was the miscalculations in assessing availability of the spice when demand was there. Even today many importers feel that asian economy is not faring well and farming community will have to sell their produce when the harvest comes and they could do nothing but to sell, but in reality the farming community has become so rich and they have no rush to sell and the best example was seen when the new crop in india came this year when the farmers decided not to sell it as they felt the current year they will see Rs 200/kg for sure which they have been anticipating for the last two years and decided to hold back.The Value added industry went in for record imports in the first half of the year so that it will keep them going till October as they are not supposed to keep the imported pepper in the country for not more than 120 days. But many has exhausted their stocks and imports totally become unviable and the pressure on indian stocks mounting with many grinders putting on their hands on the exchange stocks which can make things more worse if the sellers do not honour their commitments by not giving physical deliveries.
Vietnam the worlds largest producer and exporter has put 85000 mt across seven seas of the world, and according to VIetnasm Pepper Association the balance available from that country is only 5000 mt according to the production estimates of 90000 mt they furnished with International pepper community (IPC) But the actual production figures according to trusted agronomists who were putting the figures very correctly since 2002 the production of pepper in the country is in the ranger of AROUND 120000 - 125000mt and carry over stocks of 10000 mt and imports of 5000 mt which will make a smooth sailing to 2011 was what the importing countries thought and what happened today is literal hoarding of the commodity by the worlds largest producer and exporter of the spice to the surprise of many importing countries.
Indonesia who were ruling the Black ASTA grade pepper Biz for quite sometime now , thought that they can do it for one more year and were undercutting Vietnam and Indian ASTA pepper prices by usd 200 pmt for no reason are now caught at the wrong foot with the worlds largest pepper importer and pepper trader very active in Panjang buying directly the aslan( farmgate) grade there by making the life of major exporters difficult and quite unhappy.
Malayasia sevicing their traditional markets Japan, Korea and Taiwan with their small crop has also been importing quite a bit from Vietnam in the first half of the year to avoid supply crunch in their local market.Their prices have been totally out of line for the rest of the world other than Japan, Korea and Taiwan who predominetly using sarawak pepper and they didnt want to change the flavour profile for a few hundred dollars.
India the origin which consumes almost 75% of its production internally for home consumption and the land where they have legalised online Casino by the name National Agri Commodity ExchangesNational multi commodity exchanges was the leader in bringng up prices from usd 2850 pmt fob for asta grade in March to the current usd 4150 pmt fob levels has been behaving pretty decent this week even when Vietnam increased its prices to usd 4650 fob levels hcmc for the asta grade and 500 grams/litre prices to usd 4050 pmt fob levels and Indonesia raising their prices from usd 3700 fob panjang levels to 4100 pmt fob panjang levels on friday and Brazil moving up as high as usd 4200 fob Belem levels with buyers paying up even high as usd 4050- 4100 fob belem for august/september shipments.
The USA market which is the worlds largest single importer has been in a total denail mood has finally showed their faces on Friday and picked up all cheap priced offers from all origins and resellers as they have realised that the situation is getting worse and it will be much worse in the coming weeks and better late than never as the next big crop is seven months away and the origins will continue to squeeze as most of the pepper is still with farmers and not intermediaries.
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'Peppertrade Weekly'

'Peppertrade Weekly'

Re: Might pepper prices reach U$D 4,000 level again ?

Dear Editor

USD 4000 for pepper will be achieved in India in the futures delivery prices but hard to achieve in the spot segment . We do not have a shortage of the spice but prices are kept by highly speculative elements in India and again followed by Vietnam for no reason but to get hurt. Indonesians continue to ignore this and go forward and selling at usd 3375- 3400 for July/August/Sept shipments and for nearby shipments Vietnam also willing to sell its ASTA pepper at usd 3375 pmt fob Hcmc. India keeping its price at usd 3800 fob cochin is holding the umbrella for other countries to get the lions share of the world market. In the past one year Indonesia has emerged as the dark horse and Villian not allowing the pepper prices to move beyond a certain level with the agressive marketing by the Bold and Beautiful there by kindling the hopes of the Indian Bulls and Vietnamese Bulls to rally the prices further. If the speculators suddenly leave the scene India will become very competetive immediately in the world market and the prospects of exporting 5000 mt to asta markets will brighten according to major players handling Indian Pepper.


What we see currently is heavy inflow of imported Black pepper from Vietnam,Indonesia and Sri lanka into Cochin in the month of april and more to come in May exporters are staying away from the spot market and some of them still buying and selling future deliveries as the arbitrage is very good .


Its true that many industries need to cover pepper for the second half of the year but are not jumping and waiting patiently to see that prices are settled and since Indonesia is already in the market to sell at usd 3375 pmt fob panjang for july/Aug/Sept shipments which is currently picked up by only Indian value added processors and other importing countries still feel the prices of ASTA pepper will drop to usd 3000 pmt


We are seeing a continued fall in Indian pepper futures and this is likely to continue as the holders are the ones who dont require a gram of pepper for their home use and the sellers are mainly hedgers who has pepper in their own warehouse or in dematted stocks of National Exchanges. Unless and until Indian pepper prices come to export parity exporters are not likely to participate and extend their hand to the falling prices in Indian pepper futures which is currently heading to Indian rupees 142/kg in the second week of May 2010 when the conttracts near for its maturity according to some major analysts

Might pepper prices reach U$D 4,000 level again ?

Two weeks ago, around 12 April, the market semed to stop its upward path.
For around 5days the prices slided back giving an impression that international
buyers were right in their very cautious policy of wait-and-watch and buying
small and quietly just for immediate needs. However that "pit-stop" was short.
From monday 19 the uprise resumed with an ever growing strengh.
In Brazil prices rose an average of 25-50 dollars per ton per day during the last couple of days.

Are there fundamentals to support such behavior ?

It has been reported since last year that India´s crop will be barely suficient
to local needs: around 50 Kton crop for around 50 Kton local consumption.
Nevertheless India is still an exporter and bear a tradition in some markets
which allows higher prices. In February alone exports were reported at 1,500 mt.
Therefore India is an Importer this year.

Vietnam previewed a strong drop in 2010 production which is said to be
no more than 100,000 ton this year.
Presumably no carryover stocks or very limited from 2009 when exports reached a record of 130,000 ton.
However high export volumes are reported for every month and some anailst estimate that
possibly some 35,000 tons were shipped already.
Vietnamese growers sensed the taste of blood and begun to hold their produce expecting further rise in prices, at a point that some delays/defaults are being reported.
The misterious Indonesia is said to have no more than 10,000 ton left until the
new crop.
Brazil is confirming a very limited availability and drop / delay in his harvest.
Further, as traditional supplier to USA, Brazil may fulfill the american needs
for ASTA grade as no salmonela was reported from this origin.

Time Frame Factor
USA is having trouble with FDA due to recent salmonela issues which is bringing
some thightness and urgency to the market, especially if the importers were
buying cautiosly expecting prices to correct /adjust (drop).

And last but not the less important - the Ramadan hollyday - which is peak of
pepper consumption will start this year before the Indonesian and Brazilian
crops. All these factors put toghether may create a "hole" in the supply
sky-rocketing the pepper prices.

A good deal for speculators who quietly keep some stocks for that moment (if any...)



Editor Peppertrade

Will the rally in Pepper continue further?

Sham Nair
New Delhi March 28 2010
The current rally which began on 16th March which moved prices up by 20% in all origins have not helped mother India in the export front in capitalising the exports of indian origin Malabar Black Pepper and in fact its going to cause threat in the coming days when the import lobbys pepper hit the shores of cochin which it has bought from Indonesia , Sri Lanka and Vietnam which according to our sources is some thing close to 3000 mt which is al time record high as far as imports are concerned.
Indian malabar asta pepper prices were ruling at usd 2900 - 2950 fob cochin when Srilankan 525 gl peper was offered to cochin at usd 2425 pmt
Indonesian asta pepper was offered usd 2700- 2750 fob Panjang and Vietnam asta pepper pieces were hovering around usd 2575 to 2625 pmt fob Hcmc The current rally has pushed up Indian mg 1 prices to usd 3425 - 3475 pmt where as Indonesian asta prices are still usd 3175 fob Panjang offered on friday and unsold and Brazilian asata usd 3000 fob offered and unsold and Vietnam asta offered usd 3125- 3175 offered and unsold in Newyork market besides srilankan pepper 525 gl offered at usd 2900 cnf cochin offered and unsold on friday which clearly shows the markets are pausing and with long christaian and jewish holidays in the coming two weeks will make markets calmer and quiet. With only 35% harvest of new crop over in Vietnam and still a lot has to hit the market can Vietnam farmers hold back the entire crop and dictate prices is to be seen or other origins will capitalise and take the sales in their books has to be seen.

The sales activities of Indonesia since last year is creating some sort of doubts in the minds of major players wheher Indonesia is a bigger producer of pepper than the publicised Vietnam. As from Idonesia although being the headquarters of International pepper community.all informations about actual crop size, carry over, exports. imports from Vietnam and India everything is kept as a secret which has made the IPC a laughing stock in recent times.
Many buyers need to buy in europe and usa as the sharp increase of 20% has caught them on the wrong foot so a drastic drop in prices are ruled out but a correction is expected before the next rally

Jupiter Commodities from USA published areport on March 26

Jupiter Commodities from USA published areport on March 26
Black Pepper has continued on the upturn during the week.
The Vietnamese farmers have continued to hold back newcrop arrivals. As prices increased in Vietnam, so did India/Indonesia and Brasil.
Vietnamese traders tried buying aggressively in Vietnam combined with some European and MidEast buying has push levels up and made farmers very wary of selling. Obviously, the buying interest from consuming countries showed up on the doorsteps of the other origins. The activities in all corners, is based on need and not on manipulations.
We feel that the firmer and increasing market shall remain at least through next month provided that buyers remain interested.
We believe that buying shall continue.
This week we saw an average of a 10% increase across the board. Spot USA market remains thin with fresh arrivals/releases being picked up. With the next 2 week holiday schedule it will be interesting see how well the market shall behave itself. White pepper firmer in concert with black but as far as activities are concerned remained lack luster.