Spot Pepper shortage taken care by Comex for September requirements and future prices crash

Kochi/27th August 2010/ 05 45 HRS IST Emmar Jay



The actual users who were confronted with almost nil supplies from farmers and local traders finally learned how to meet their requirement of pepper for immediate needs which they missed at 187/- a kg a fortnight ago by clicking the button of the computer and took home 1403 mt at 206 kg from the national comex in the nearmonth contract which matured on Friday the 20th August. The hue and cry of lack of supplies for some time is now over and in the coming months the stocks lying in the National Comexes will be over which was increasing every other week with indian pepper prices currently highest and outpriced in the world market since last 10 weeks . Throughout this year whenever there was an oppurtunity seen on arbitrage investors were buying exchange delivered Mg1 and the supply to the terminal market has been an issue as upcountry traders have become packers and suppliers to Investors which reduced the movement to the main terminal market Cochin. Another reason for the reduced or almost nil arrival is the lower prices published by the price publishing company IPSTA for sometime which was far from real traded prices and upcountry dealers deserting the terminal market market sources said.

Week 33 was an action packed week with Vietnam increasing the prices from usd 3700 fob Hcmc to usd 4050 fob hcmc for their most traded variety 500 g/l and Brazil increased the asking prices of their B1 variety from usd 3800 fob belem to usd 4100 fob Belem and indonesia increasing the asta prices from usd 4150 cnf Newyork to usd 4550 pmt and some shippers were completely withdrawn waiting for more arrivals to come before making further sales. Actually the Indonesian ASTA pepper sellers are very few and they have to take care of the entire crop as almost 90% ofthe crop is sold during the harvest season itself and exportes need cash to rotate stocks. Although the crop is only 22-25000 mt for Black pepper the huge carry over left behind them which is almost same as the crop of 2010 is said to be the reason why Indonesia has become the biggest ASTA grade pepper supplier since last 2 years and this will continue into 2011.The Vietnamese and Indian speculators are holding the Umbrella for the Indonesians to market their pepper comfortably rhis year too, we can understand Vietnam doing so with more than 100,000 mt pepper being out of the country in the first seven months and said to be having only 40,000 mt more and some say 20,000 mt and according to VPA its all over and they are surprised how their estimates went wrong which was very well arrived by a team of experts of VPA consisting of pioneers in the field such as

- KSS Vietnam Co,.Ltd
- Nedspice Vietnam Co,.Ltd
- Domesco JSC
- An Huy B.T Co,.Ltd
- Comco Co,.Ltd
- Maseco JSC
- Nam Viet Co,.Ltd
- Chu Se Pepper Association
-Olam Vietnam Co,.Ltd
- V.K.L Vietnam Co,.Ltd


source http://www.peppervietnam.com/en/news_detail.php?id=5340&id_groupN=32&id_catN=6

- Authorized provincial departments  came to the conclusion , the average productivity of main provinces would be 20 – 25% less than previous year. So that the total output will be 90,000 MT ( 20% lower than last year)

Black pepper is in the hands of speculators in all origins and one can see heavy volatility in the physical markets there and in the futures market here and its advisable that retail investors should stay awat from the scene as there is no protection availabe as the market watchdog do not know how to regulate and control the futrues market and its high time the fmc is scrapped and the regulation should be handed over to SEBI otherwise the mechanism will be completely destroyed by misinformers and mighty titans who has no role to play in a commodity which they have not even seen.

Emmar Jay

Heavy Indian Buying Pushes Indonesian Pepper Prices up by usd 200 pmt

Sham Nair/19th August 2010 /04 45 HRS IST

Spectacular shopping by indian value added industries in Indonesia pushed the Indonesian ASTA Pepper prices from usd 3775 pmt fob panjang to usd usd 4050 pmt fob panjang in 72 hours surprised the USA and European buyers on Wednesday.
With Indian futures exchange suddenly exciting its players since Monday with big propaganda by the media that the country is suddenly having good demand from within the country and outside the country speculators came into play and raised the future delivery prices making holders of spot cargo happy as they had a chance to sell their holdings at a very high price which they missed in late july according to our industrial sources.
"I am astonished with the news like this" said a senior trader in a multinational company "how can India have export enquiries when its prices were outpriced by usd 350- 400 pmt compared to Brazil and Indonesian pepper and the selling centers were trading pepper much below the prices indicated in the terminal market Cochin. Its nothing but speculation let loose and uncontrolled by the market watch dog FMC" alleged the Wyanad Pepper Traders association. "Traders like us who have been making a living only on pepper trade for genrations cant do any biz and like farmer suicides you will know hear pepper trader suicide if the speculators are not properly controlled by the FMC" they said. "They are giving a privillege to handful few who had a super chance to cover their reqirements decently till the end of the year with the 120 days re export days adjusted very rightly with the timely purchases from other countries" .

In Vietnam local players were speculating on physical stocks along with two known Dutch companies who are spreading very bullish reports to have high priced sales for long strings for later positions according to our european trade sources and Indonesia has been an hindrance and they acted in Lampung market also picking up substantial quantities of asta rejections rechristened as Indoneian 500 g/l pepper and some good quantity asta along with indian value added industries making the indonesians rising their asking prices. Brazil is closely monitoring Indonesian activities and orchestrating their sales in a small way as the harvest has not gained momentom yet and Indonesian harvest will be over by the month end or early september. Sri lanka who sold as low as usd 3550 pmt has raised their prices to usd 3700 cfr cochin seeing the indian exchanges move..

Prices reported last night in newyork by various origins were India usd 4600 pmt c& f Indonesia usd 4250 pmt c% f Vietnam asta usd 4650 pmt c& f ( with limited sellers) Vietnam 500 gram 3970 fob hcmc vietnam 550 grams usd 4200 pmt Brazil B2 usd 3800 pmt Brazil B1 usd 3900 fob Belem and BASTA usd 4000 fob belem with no trades reported as USA buyers still on watch and wait mode and lately covering on big dips and keeping sidelined from markets and not carried away by the big moves in Vietnam and Brazil as they have Brazil and Indonesia as their most favoured sellers currently.

Heavy Indian Buying Pushes Indonesian Pepper Prices up by usd 200 pmt

Sham Nair/19th August 2010 /04 45 HRS IST

Spectacular shopping by indian value added industries in Indonesia pushed the Indonesian ASTA Pepper prices from usd 3775 pmt fob panjang to usd usd 4050 pmt fob panjang in 72 hours surprised the USA and European buyers on Wednesday.
With Indian futures exchange suddenly exciting its players since Monday with big propaganda by the media that the country is suddenly having good demand from within the country and outside the country speculators came into play and raised the future delivery prices making holders of spot cargo happy as they had a chance to sell their holdings at a very high price which they missed in late july according to our industrial sources.
"I am astonished with the news like this" said a senior trader in a multinational company "how can India have export enquiries when its prices were outpriced by usd 350- 400 pmt compared to Brazil and Indonesian pepper and the selling centers were trading pepper much below the prices indicated in the terminal market Cochin. Its nothing but speculation let loose and uncontrolled by the market watch dog FMC" alleged the Wyanad Pepper Traders association. "Traders like us who have been making a living only on pepper trade for genrations cant do any biz and like farmer suicides you will know hear pepper trader suicide if the speculators are not properly controlled by the FMC" they said. "They are giving a privillege to handful few who had a super chance to cover their reqirements decently till the end of the year with the 120 days re export days adjusted very rightly with the timely purchases from other countries" .

In Vietnam local players were speculating on physical stocks along with two known Dutch companies who are spreading very bullish reports to have high priced sales for long strings for later positions according to our european trade sources and Indonesia has been an hindrance and they acted in Lampung market also picking up substantial quantities of asta rejections rechristened as Indoneian 500 g/l pepper and some good quantity asta along with indian value added industries making the indonesians rising their asking prices. Brazil is closely monitoring Indonesian activities and orchestrating their sales in a small way as the harvest has not gained momentom yet and Indonesian harvest will be over by the month end or early september. Sri lanka who sold as low as usd 3550 pmt has raised their prices to usd 3700 cfr cochin seeing the indian exchanges move..

Prices reported last night in newyork by various origins were India usd 4600 pmt c& f Indonesia usd 4250 pmt c% f Vietnam asta usd 4650 pmt c& f ( with limited sellers) Vietnam 500 gram 3970 fob hcmc vietnam 550 grams usd 4200 pmt Brazil B2 usd 3800 pmt Brazil B1 usd 3900 fob Belem and BASTA usd 4000 fob belem with no trades reported as USA buyers still on watch and wait mode and lately covering on big dips and keeping sidelined from markets and not carried away by the big moves in Vietnam and Brazil as they have Brazil and Indonesia as their most favoured sellers currently.

Indian Pepper remains outpriced but imports surge

Indian Pepper remains outpriced but imports surge
2010/08/16


Kochi/16 th August 2010
Indian Black pepper continue to remain out priced in the international market thanks to the heavy consumption in the domestic market of the spice and infact the country barely produces what it needs and there are no exportable surplus this year according to veterans in the trade. "We expected this scenario earlier this year and began focussing our attention on the domestic front rather than exports" commented the head of a leading Black Pepper exporter who didnt want to divulge his name.

According to the statistics of Chamber of Commerce the country has exported 5,500 mt of the spice in the first four months of the financial year but the import figures were quite alarming which was close to 7,500 mt which means in short, the exporters are not using indian origin Black pepper at all, allowing the domestic prices not to flare up beyond a certain level.
"Although the country has imported 7500 mt in the first four months and more to come till the end of the year I do not think all the pepper we imported are heavy berries used by the grinding industry and possibly 40% of it may be by the grinding industry and rest by the oil and oleoresin industry" said Mr Jojan Malayil of Bafna Enterprises the countrys largest exporter of Indian origin Black pepper. "But the alarming side of it is that we are jobless for almost 9 months in an year and are at the mercy of operators in the national Commodity Exchanges and, new generation experts who give buy and sell calls based on charts" he added. The genuine traditional pepper guys are out of the system said a dealer from Adimaly who is uno of the Kerala pepper supply chain.

With IPC becoming a laughing stock in the past years the new Secretary General is on damage control according to our informations and is trying to put a stop to the nonsensical statistics on carry over, production and exports and balance available crop in producing origins especially in Indonesia and Vietnam who have been misleading the pepper people since last 3 years .

With harvests getting to its peak in Indonesia the prices from there has been dropped to usd 3800 fob Panjang and Brazil where harvest is almost round the corner in the main producing area Para these countries are vying for export orders as cash has become King . The prices from Brazil varies from shipper to shipper and agents from agents. The european claims they have offers of ASTA at USD 3900 fob Belem for August/September shipments the USA Brokers say the lowest they have is usd 4000 pmt but the main broker in Brazil says its all nonesense and may be you can buy at usd 4000 fob Belem but there is no guarantee that it will be shipped if the market is not in the favour of the shipper and one should take nomianl prices of ASTA at usd 4100 pmt fob Belem although there are no buyers at this Juncture.

Mother India the controller and wave setter of prices in the Globe is currently quoting usd 4250 pmt fob cochin for Mg 1 ASTA where as Indonesian ASTA is finding it difficult to find a home today at usd 3800 fob Panjang. Vietnam 500 g/l prices remained strady at usd 3700 pmt fob HCMC during the week and same is the case with ASTA prices which was hovering around usd 4200 pmt fob HCMC. With Bears pressing the markets down in India based on international news, the Indian market is somewhat holding ground with its huge domestic requirement and prices seems to settle between the Rs 180- 185 range for the next four weeks.

Sham Nair

Pepper to remain flat till mid September

Dear Editor,

London 09th August 2010
With Summer holidays underway in Europe and USA where buyers are away on annual vaccation Black and White pepper which are currently in "Bear Hug" will continue to remain so as the cheer leader India lost steam without finding buyers for pepper at higher levels. Speculators who bought pepper thinking that it was going to hit lifetime high prices like all other commodities were pressed to the wall With Vietnam and Indonesia once again misleading carryforward and production figures for 2010 and was undercutting Indian prices and getting most of the sales for even winter period which was a last resort for indian exporters who are engaged in exporting genuine and pure Malabar Black pepper.Brazil and Indonesia pushed for sales and lowered their price tags below usd 4000 fob Belem/ Panjang couldnt attract many buyers as exporters there for vying sales and some of them even sold below usd 3900 belam for immediate cash and since arrivals peaked up in Lampong exporters were even offering at usd 3925 pmt fob but only for August and september shipments,

India the country which claims to have the highest domestic consumption of 40000- 45000 pmt seems to have dried up available stocks of farmgate as even after prices hitting Indian Rupees 210-215 per kg there was a big reluctance to sell which obviously means two things one is the available stocks are over and the other is the greed continues as all were praying for Inr 200 for a decade and when it came none wanted to sell. The country is still said to be carrying one crop under their bed and not willing to release it as current levels do not seem to be interesting. Meanwhile the monsoon showers has been pretty good so far and the 2011 crop looks promising at this time but it is stilll early as only by October we will get a clear picture. Indonesia the mystery place continue to be the worlds biggest ASTA pepper supplier for 2010 with almost all American orders under their belt and some exporters have quitely sold till the end of the year when indian futures hit the decade high of Rs 220 per kg in the month of july.

Vietnam who projected their exportable surplus for 2010 at 90000 mt have already exported 85000 mt through official custom route and 10000 mt through cross border trades still has 25000 mt according to pessimist exporters and 35000 mt according to optimists but God only knows the real truth and one has to wait till Jan 10 2011 to know the real story.

Sri Lanka the indian neighbour where the new crop is underway are soliciting orders at usd 3700 cnf cochin I(Indian rupees 170.77 per kg ) is still not getting buyers as the indian exporters are heard sitting on a pile of pepper finding no place to sell other than the national commodity exchanges which seems to have depressed the sentiments of the Bulls and markets have fallen to Bear Hug

Emmar Jay for Peppertrade Blog

Speculation, poor physical market understanding lead to volatility in commodities

THIS ARTICLE DOES NOT RELATE TO PEPPER ITSELF BUT I FIND IT SOMEHOW USEFULL...
Editor

Kunal Bose / Aug 03, 2010, 00:42


It is not anybody’s case that the financial commodities markets are operating in an ideal environment of transparency and regulation. In fact over the years, commodity exchanges in London, New York and Chicago have been pressured to exercise increasingly rigorous control on trade and improve transparency. Exchanges by their very nature are to face waves of speculation. But controls are generally well in place to avoid undermining of markets.
Even then concerns are expressed from time about speculation money routed through hedge funds sending prices of commodities, particularly oil and gas and iron ore on roller coaster rides. The speculative phenomenon has been much in evidence in the last two years. It no doubt has got much to do with the challenges faced by governments cutting across stages of development of the countries they represent – the developed world besides, both Beijing and New Delhi launched major stimulus programmes and any rollback is now to be done judiciously – to meet the challenges of 2008-09 recession. At the micro level, the almost felled industries are to first put their house in order and then return to the growth path.
But surprisingly for all the imperfections of the commodities markets, government attention invariably turns to the financial segment where because of very low interest rates speculators are finding it profitable to keep industrial commodities in warehouses.
To give one example, funds control over 80 per cent of about 4.5 million tonnes of aluminium in London Metal Exchange warehouses. Speculation is the reason why the funds are these days particularly active in commodities. No doubt aluminium and copper will have fared worse had not funds snapped up large volumes of metals in anticipation of future gains.
Moves by funds, call that speculation if you want, leave an impact on the market in the short term. Javier Blas writes in Financial Times that “over the medium term, prices in commodity markets respond largely to murky supply, demand and inventories signals. And here is the problem that policymakers are ignoring to the perils of the world economy.”
Not only does Blas point to the common ignorance of physical commodities markets, but more significantly laments the fact of our “worsening” understanding of these. One reason of our poor appreciation of the physical market is the rapid rise of China, South Korea and India as users (and producers too) of bulk commodities, while, as Blas points out, “the statistical and policymaking system was put in place in the 1960s-1970s” when such countries were not players of much significance.
Unfortunately, the system has not been sufficiently radicalised since to truthfully reflect the shift in production and consumption focus from developed to emerging nations. Growth in industrial commodities has been mostly in the East as high costs of labour and energy and also increasingly rigid environmental laws have caused shrinkages in metals production capacities in the West.
While there has been a major shift in action to the developing world since the mid 1980s as far as industrial commodities are concerned, the agencies to collect and analyse demand, supply and stocks data are still to be appropriately geared to precisely monitor movements there.
In the process we are left with an imperfect understanding of the physical commodities markets and the governments rather inexplicably are staying focussed on financial side of commodities markets. The International Organisation of Securities Commission has now said in a report on ‘Commodities Futures Markets,’ prepared for G20 that the “relative imbalance in the degree of transparency between financial (commodities) markets versus physical markets – which are, ironically, by far, the most transparent markets –obscures analysis of the many complex inputs into commodity prices.”
The play in commodities financial markets cannot but be based on price movements and demand and supply at a particular point in the physical market. However, much to general dismay, tracking of information in the latter remains imperfect. The blame for this is to be laid largely at the door of concerned industries. Blas, therefore, ruefully says, “Industry lacks enthusiasm to improve statistical flow as companies see their intelligence as proprietary information, key to their trading.”
He further makes the point that some of the more than 25 international organisations tracking physical commodities markets are just “hopeless.” And why is there not a world organisation to collect and analyse prices and supply, of now, as volatile a commodity as iron ore, the principal ingredient of steel making? To give an idea of volatility of this mineral, its prices rose by nearly 50 per cent in the first five months of 2010. But as that squeezed the margins of steelmakers who could not pass on the incremental cost to the buyers of the metal, they started destocking iron ore already with them.
Driving down stocks is much in evidence in China, the world’s largest importer of iron ore. The result is, spot prices are falling. In the process, the Baltic Dry Index, which measures chartering rates of large and very large ships is also taking a hit. The world needs to have a better understanding of the physical market.
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Indonesia

Dear Editor,
30/07
Indonesia which until three weeks ago, has been offering black pepper at usd 4500- 4600 a tonne, has suddenly turned out to be the cheapest source of this spice in the world. Thanks to the recent melt-down in its domestic prices, which happened as the wotlds largest oprerator of Black pepper who was buying the farmgrade pepper also competing local exporters withdrew from the market and indeed has become an agressive seller. The harvest is coming to an end contrary to the news of Indian media that the crops in Indonesia is delayed commented one of the top domestic exporter.Though the price crash comes as a boon to exporters, they are, however, cautious about responding to any new contracts for string shipments till the end of the year and are more comfortable in working for nearby shipments and offers are made at usd 4200-4225 pmt cfc 1.5 Ny . It is estimated by the agricultural department that nearly 25,000 tonnes of black pepper would be harvested in the current year although a section feels the crop is only 15000 mt and another section feels the crop is 35000 mt.

The Indian Black Pepper Futures is dominated by bull operators who have made the prices to usd 4650 pmt fob cochin for the Indian variety Mg-1 asta grade making it the worlds most expensive pepper which was well in line with other producing origins till four weeks ago.Thanks to the huge demand by the domestic operators after the prices crossing above Rs 200 per kg in the producing states kerala and karnataka .You can buy Black pepper much cheaper than what it is quoted in Cochin said an exporter.

Though Indian pepper in value-added forms has great demand in the world market, exporters of such products are sourcing their requirements from Indonesia since last ten days as the landed cost of this pepper in Kochi is only Rs 190/-kg and the neighbouring island nations pepper landed cost in kochi is only Rs 185/-per kg., said a Kochi-based exporter. Attracted by lower price, Indian processors have booked about 500-650 tonnes of pepper from Indonesia in the last week. This has surprised the bull operators as some exporters who were heavily long in the indian exchanges physical stocks are likely to deliver it back to the fellow citizens as they have got replacement Rs 25/kg below indian Black pepper for their value addition. With declining demand for the spice from abroad, and increasing prices domestically India has become a net importer of the spice in the first quarter of this financial year according to the statsistics made available by the Cochin Chamber of commerce and industry.
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