What s gonna happen to Black Pepper market in 2011 ? What is the trend ?

The last two weeks we ve been receiving emails from many readers and customers with this question: Whats gonna happen to the market now, near month, the year ?...
After the big rise in 2010 when prices started at U$ 2,800 in January and ended in December at U$ 4,900 a lot of uncertainity clouds over the traders and importers all over the world.

Historically, every year prices start by droping in the beginning - January or February or March or even earlier some years like in 2007 and 2008 - in December, on the expectation of the two of main crops _ India and Vietnam. However India ceased to be an exporter already so the determinating crop became just Vietnam. Nevertheless India became a net importer and a big one - the sort of one that may determine the world export prices with its purchases abroad.

This was what the market expected to happen again this year, moreover because prices are said to have reached historical top heights staying over 4,000 level for more than 6 month.

However this is not happening this season - already in the month of March, new crop from Vietnam arriving slowly but no big change in prices. And the buyers - relutantly - are forced to buy, even small quantities, but they are buying.

We read some weeks ago an analisis saying that USA buyers were covered because of the 2010 imports: "United states of America has imported 52,014 Mts of black pepper compared to 49,148 Mts in 2009 and and 49,626 mt in 2008." see @ Record imports of Black pepper in 2010 Keeps USA Buyers away from Markets 2011/02/17

What this report forgot was that before the crisis of 2007 USA were buying 52.152 mt in 2005 and 55,598 in 2006 and growing at a rate of 3% per year average. Thus, nothing more natural than to start growing again when recovering from the crisis. We consider that these figures do not indicate that market is covered now.

This week the Public Ledger published a report upon consulting leading Pepper operators in Germany, Netherlands, Uk, and Olam people.

A part of minor divergences all of them consider that demand is steady and and buyers are short to some point, trying to delay their purchase to the maximum possible in hope to get better prices when Vietnam will come in full swing. However as one of the interviewed persons say " People have to buy in, they can’t wait longer: they have to book physically the pepper. So if the Vietnamese (prices) are dropping everyone will jump on that like crazy to buy it.” And commented about Vietnam "“If they are able to hold back the pepper they can play this market like they want, because the buyers have no coverage and there are very limited stocks in the pipeline. We are completely dependent on Vietnam.”

Indonesia who played a decision factor in the last two years sems to have no more enough stock to trade the buyers position, thus this year more than ever Vietnam will decide where the Black Pepper market will go.

Vietnam will produce between 100 kmt, - official information - and 120 kmt, according some skilled traders. Possibly even more if we learn for last years. However this makes no big difference as the world economy resumed and production is said to be below the consumption. Vietamese producers, processors and exporters made some good bucks last seasons so possibly they are pretty wealthy this year, with no rush, thus for make cash.

Other point not very much analized is that all prices for any commodity rose in general. The USA Dollar devaluation indicates that the Pepper priced today at U$d 5,000 equals to aproximatelly U$D 2,000 in the year 2000. And, just for the records the avreage price of pepper in 1999 was U$D 4,880. So historical hights is another lulaby. To become true, todaý price should be over U$D 10,000 pmt.

There is room to go, thus...

PEPPERTRADE EDITOR

Pepper Futures to fall on "Ground Reality" Sham Nair expresses his opinion

Kochi November 21 2010
With indian farmers releasing close to 5000 mt of black pepper stocks quite unexpectedly from the beginning of the month the tightness of the spot availability of the spice eased off and with 1085 mt stocks of so called mG-1 stocks made available to all the exporters from exchange platform ; the Black pepper futures currently running at a hefty premium will drop in the coming days and one is seeing ground reality of pepper trade currently according to the veterans of Pepper trade in India

We seldom see india as an origin seller when prices are low but they emerge as the principle source when prices peak commented a trader in Germany who didnt want to quote his name. There is no other origin like india who wil keep one crop below their beds and will show to the world when prices reach the usd 5000 mark he added.

Since farmgate pepper is continously availabe between Rs 10- 15 a kg depending on density of the material delivered to warehouses of exporters, major exporters are not running after exchange delivered pepper and in the recently matured November contract Nine exporters have together picked up only 50% of the total delivereis tendered by a major broking houses account of several clientse stocks were loosing validity on december 5th .

With continued availability of farmgate pepper and limited overseas demands currently and hardly any domestic demand, with new crop arrivals just 6 weeks away the expensive pepper futures are likely to fall on Ground reality although Funds will try to hold it for some more time trying to pass the hat to retail investors.

Weekend prices quoted in new York markets on friday 20th november were as follows

Brazil 560 g/l usd 4750 fob Belem Brazi BASTA usd 4850 fob Belem Indonesian ASTA usd 4950- 5050 fob panjnag Indian mg-1 asta usd 4900- 5100 fob cochin according to Newyourk based broking companies of spices.

Sham Nair

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India pepper needs long term strategy to stay ahead

November 05, 2010
Well, it seems like Black pepper from India will remain as hot favorite in the international market, as it is almost clear that supplies from Brazil and Indonesia will be inadequate in meeting the global demand, given big daddy Vietnam shows up only in January.

But latest reports also suggest that production from Vietnam will be lower by 10% at 90,000 tonne, compared to previous year. Further, if bad weather persists, Brazilian production will also be down by 40%.

So, who will benefit? Being the second largest producer after Vietnam, Indian pepper is definitely going to benefit from this global pepper production meltdown. Another supporting factor is the narrowing of the price gap between premium quality Indian pepper and other varieties. All these suggest the near term surge in market demand both locally and globally.

In fact, the rush is already evident with the price shooting up and springing over the primary target levels of 15150 earlier in March. If bad weather persist production will be dampened further and there is a good chance for the prices to breaching the 16,000 territory soon.

But the million dollar question is will India be able to handle this surge in international demand? Diseases, erratic climatic changes and obsolete agriculture methods had caused our output to slump to current projected level of 55,000 tonne from the once mighty 1,00,000 tonne. What might have caused this? Multi-crop planting policy in Kerala and Tamilnadu is indicated to be as the prime reason for this decline.

Currently, productivity of pepper in India is only 306 kg , while Vietnam has way ahead producing 1,200 kg – 1,300 kg per hectare. And forecast of International Pepper Community indicates that there will be a shortage of nearly 22, 216 tonnes in the 2010. the forecast also projects a significant rise in the global consumption to be in a range of 3,20,000 – 3,50,000 tonnes.

According to the Directorate of Arecanut and Spices Development, India is expected to produce around 53,000 tonne in 2009-10 , with Kerala contributing around 35,000 tonnes, up 40% from the same period a year ago.

Spices Board of India also points to similar figures with production figures at 55,000 tonnes and consumption figures at 44,000 tonnes, annually. Exports are expected to reach 25,000 tonnes, with imports around 14,000 tonnes. Production might have increased on a sequential basis, but the fact nevertheless is that farmers are increasing turning their face away from the once trust worthy Black Gold.

Falling prices is indicated to be as one amongst the many reasons. Price declines have also caused farmers to migrate to other crops which resulted in the decrease of farming area. Data suggests that there is a 0.3% decline in farming between 2005 and 2006 in Wayanad alone. Increasing cost of production is yet another area of concern to farmers.

For India to surge back to its golden age, answers should be found to all these vexing questions. May be it is now also the right time to voice all these concerns as experts from field will be here at Kochi to discuss all these matters.

Jointly organized by International Pepper Community and Spices Board, the meeting will discuss issues related to farming, production and export. Brazil, India, Indonesia, Malaysia, Sri Lanka and Vietnam are the members of IPC with Papua New Guinea as the associate member. The meeting will be held at Kochi, starting November 8.

What intended to say is that the current edge provided by bad weather won’t last long and in no way can be depended upon as a positive indication on a long term basis. What we need to have is long term planning and its effective implementation.

So, the verdict is that Indian pepper for the time being will definitely get an upper hand in International market amid tight supply and lower production. But to sustain this upsurge we need to device long term plans that would help increase yield per hector as well as total production.

Fueled by strong buying interest both domestic and international, Pepper futures are currently trading high with spot price at Kochi rising to 20,200 per quintal for un-garbled pepper and 20,800 per quintal for MG-1.
Source: CommodityOnLine By Praveen


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SMX to launch first global pepper futures contract - What is your opinion ?

The article below might be the most important fact of the year or even of the all the modern history of Pepper Trade worldwide.
We propose a discussion of this item.
Please share your thoughts, opinions, ideas about that

SINGAPORE September 28, 2010(Commodity Online):

Singapore Mercantile Exchange (SMX) has announced it will launch world’s first international Black Pepper Futures Contract (Contract Symbol: SMPEPPER) platform with physical delivery-based settlement, as its first agricultural commodity derivatives product.

SMX has obtained approval from the Monetary Authority of Singapore (MAS) to list SMPEPPER on its trading platform. SMX is at present working with relevant industry partners to create awareness about the new Contract, while collecting their feedback to streamline the physical settlement procedure.

Mr. Thomas J. McMahon, Chief Executive Officer of SMX,commented: “Exhaustive
research and close consultation with key industry players is one of our primary objectives. This latest contract constitutes noteworthy fruition of such efforts.”
“We are listing the most commonly traded grade of Black Pepper, from discussions and partnerships with key exporters and importers both on a regional and global basis. Trading hours will span all major markets, providing exciting opportunities for price discovery leading to global benchmarking. Managing price volatilities is a very crucial factor in agricultural products such as Black Pepper, where markets are unpredictable.

The marketplace seems excited by this latest development, and on our part
agriculture commodity derivatives is a key segment for expansion,” Mr. McMahon added.
Mr. Vijaykumar Iyengar, Managing Director of Agrocorp International Pte
Ltd, said: “Over the last two decades we have witnessed Vietnam overtake India as the world’s largest producer and exporter of Black Pepper. Overall the key producers are still in Asia, while the larger consuming nations are in the West. Such listings by SMX essentially bring all market players to the same table, ensuring efficient price discovery.”

Mr. Do Ha Nam, Chairman of the Vietnam Pepper Association, said: “Having a Black Pepper futures contract would give rise to natural price discovery which would benefit the entire value chain participants of Black Pepper.”Source: Commodity Online


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Indian Pepper Mart Heading For Serious Trouble

Mumbai / The indian pepper mart is heading towards deep crisis in the next eight weeks unless export orders doesnt come to india or the exagerated 50,000 mt domestic consumption is not really there but instead still in the high 30 K . India onetime the worlds largest producer and exporter besides the largest consumer of black pepper has been becoming a net importer since last year with local indian farmers who do not want cash as banks dont accept cash without getting satisfied with the source of the money are better off keeping their produces under their beds rather than selling it and holding on to cash which they have no space to park. This years bull run has replenished the stocks in the National Commodity exchanges and warehouses of cash rich people who has invested in pepper mainly in the physical stocks of the exchanges. Now that the six monts maximum validity for tendering deliveries in contracts are getting expired in nearmonth October and November contracts for more than 3000 mt everyone is quizzing how this situation can overcome with no export orders since last eight weeks from industries who require pepper for winter and christmas/Newyear blend requirements other than from overseas traders who were playing with the market and currently struck not knowing what to do with the pepper they have covered thinking all others were short and will come to cover for their requirements. we have seen major exporters tendering physical deliveries in the last two expiry contracts are really eyebrow raising with the kind of volumes they do on exports and top of that delivering in the domestic pepper exchange . Although the total stock with the Comexes is only 4300 mt which is just 15 days export of Vietnam but it is too high for Indian exports of just 1000 mt a month on an average this year and most of it is imported pepper reexported.


According to market sources, there is a propaganda amongst some leading traditional pepper traders that the quality lying in the comexes warehouses are substandard and inferior and that is the reason why exporters are shying away from taking physical deliveries . On maturity in the contracts of National Exchanges.99% of the longs during the teure of the contracts are held by people who do not want even 100 grams of pepper for their use but accumulated positions purely for speculation only on buy calls by new born analysts in various leading commodity broking houses who are making charts and make calls for their livelihood against all fundamentals of the market and many times even do not know how to advise clients to exit once they are in the vicious circle .

The indian pepper futures as expected hit the 4% circuit down limits today the first day after maturing of september contracts with 341 mt spot pepper being picked up by couple of exporters who had little commitments and inturn was delivered by the National Cooperative and hedgers who wanted to free their money with the carry becoming neglible these days .

Indonesia the current cheapest ASTA Black pepper source has reduced their prices to usd 1.96/1.98/lb cfc 1.5 ny where as indian mg-1 asta prices despite todays 4% circuit down limits is usd 2.10/lb cfc 1.5 ny for nearby shipments. Vietnam prices were stable with origin shippers quoting usd 4050 pmt fob HCMC for 500 grams/litre pepper and usd 4300 pmt fob Hcmc for 550 grams/litre pepper. Where as brazilian ASTA pepper has come in line with the Indonesian ASTA pepper prices but the fact is it has become hard to find buyers globally for pepper currently.Indian domestic market is looking for marriages which happen every other day and festivals which are coming only in the second week of November as during marriages and festivals indians simply use plenty of pepper to make the pepper growers happy besides Commonwealth Games beginning in October which will halt the truck movements to and fro from Delhi.



Jennifer Larive/21 SEP 2010 21-30 HRS IST

Cloves trend

The International Cloves market too is showing a little weakness with Comoros quoting around USD 5100 /- PMT and Zanzibar Cloves new crop also coming down to USD 5300/-pmt and Indonesia is also quoting around USD 6000/- pmt fob levels.

IPRABA Report

Fall in Indian pepper futures drags other origins to follow suit

Mumbai/ september 17th/03 45 HRS IST/


The sudden sharp fall in the indian pepper futures of usd 225 pmt and the huge amount of stocks which are going to loose validfity for delivery in the National commodity exchange in the next nine weeks with hardly any export orders and major exporters have sold their stocks in the exchange platform as they could sell their stocks usd 500 pmt above other origins in the international market is mounting pressure on the bulls . The market without any reason has been inflated by muscle and money power with totally wrong propaganda about shortage, biz happening at higher prices with india and new generation analysts who had not seen black pepper contradicting veterans in the trade with little or no information or contacts with any overseas markets has literally wiped the money off from retail and small traders with their very invaluable advices in the form of buy calls.

Indonesia the current threat for all other ASTA Black pepper sellers in the world giving no clue regarding their current years production, carry over from previous years and exports during the year and keep on pressing for orders for september and October is driving buyers away from the market who are on hand to mouth buying.Besides current years crop of 22000 mt the country was having an undeclared carryover stock of 25000- 28000 mt which is quitely being sold off by the Indonesian exporters is the reason why the anticipated squeeze and price rise has not come into play yet.For sept and October shipments Indonesian origin sellers are quoting usd 4100- 4125 fob panjang and Brazil Asta new crop is offered at usd 4300 fob Belem against the current indian price of usd 4500 pmt fob cochin . The strong indian rupee against usd is also making indian prices high in the International market. Vietnam who has been holding on to the levels of usd 4150 pmt for their 500 g/l has dropped the prices to usd 4050 pmt and 550 g/l prices from usd 4350 has been dropped to usd 4220 pmt fob cochin. Since white pepper prices are higher the ASTA sellers are not keen to sell as converting it into white is more rewarding monetary wise for them.

The markets will see life only towards end of november or early december when Indonesia and Brazil slowly retreats from agressive selling after sold enough for the year according to experts in Cochin and we will see prices declining in the coming weeks and the October futures are likely to test Rs 180/kg .

Jennifer Larive