SPICES TRADE - CONSIDERATIONS ABOUT 2021 YEAR - TRENDS FOR 2022

If 2020, confined us to our homes, 2021 allowed us some freedom and many challenges in our efforts to return to the normalcy of pre-pandemic. 

THE CONTAINER

This metal box, the basic clog in the global supply chain system became the most sought after and premium component in 2021. As freight rates reached dizzying heights, finding suitable food grade empty containers at origins became a treasure hunt and in the end stages highest bidding auction situation for exporters, as shipping lines raked in billion $ profits.

The spices trade was faced with disrupted supply chain issues - farmers and planters inability to take care of crops and plantations due to lockdown restrictions and/ or reduced labour forces and weather challenges 2021, also demonstrated the inherent highly volatile nature of the spices trade. 

Many spices showed a sharp price spike on fundamental reasons but were unable to maintain the high levels due to the unstable demand situation across the globe. 

The hand-to-mouth buying trend visible in 2020 continued in 2021 and looks to be approaching the just-in-time buying philosophy, propagated by the Japanese in 2022. Extreme risk aversion is now a dominant theme, and it will only spread across major importers/buyers as new variants and vaccination protocols emerge.

For India as a major spice origin, the challenge lies in providing pesticides controlled spices, as more and more countries become stringent in their  requirements. As on date, it does look like a Herculean task unless government agencies work together with private players.

Currencies remained volatile as ever, (special mention for the Turkish Lira, which gave strong competition to the cryptocurrency markets) with the US FED continuing to print USD and dropping hints of tapering in 2022. 

With Chinese New Year in early February, Ramadan starting from early April and the big behemoths buying during the first couple of months for their yearly requirements - we expect a lot of volatility and good demand for most spices up to April, 2022 - by when hopefully also the Omicron situation will stabilize across most countries.

VIETNAM - Bottlenecks could put paid to pepper

19/12/2021 

Pepper prices have been skyrocketing to the highest level since 2018 – but with a lack of supply, many pepper growers have put little trust in the black seeds and even reduced plantations to be less dependent on the fluctuating market.

Since the export price of pepper has increased, Hoang Phuoc Binh, general secretary of the Chu Se Pepper Association in the Central Highlands province of Gia Lai found, “many farmers cannot sell at these high prices because the previous season’s pepper is already almost sold out.” Pepper farmers will soon harvest the next crop, but their output remains low as most of the pepper is still green and harvests proceed slowly due to a lack of labour. “We hope these good prices will last until the crop is harvested,” Binh said.

Economic recovery and scarce supply are pushing pepper prices up in the global markets. On October 29 in Brazil, the export price of black pepper increased by $200 per tonne to $4,200 from September 30. Meanwhile, Vietnamese black pepper exported from Ho Chi Minh City’s ports also increased to $4,500 per tonne. Nguyen Nam Hai, chairman of the Vietnam Pepper Association (VPA), is concerned whether Vietnam’s production is the main reason for the sharp increase in prices. The World Pepper Association has warned about pepper output which declined globally due to an 8 per cent drop in Vietnam’s output, though Brazil’s output remained steady, and Indonesia’s output even increased by 3 per cent.

Vietnam is the world’s largest supplier of pepper, overtaking India and accounting for 60 per cent of global exports. Last year, Vietnam’s output was expected to reach about 350,000 tonnes of pepper, of which about 90,000 tonnes were transferred from the inventory of 2019.

All forecasts pointed to a new price recovery cycle, with high global demand and a supply shortage at the end of the year. However, many farmers in Gia Lai, the pepper-growing capital of Vietnam, do not want to spend more money on this crop. Vo Hoai Nhon, farmer from in Gia Lai province’s Chu Puh district, said that expanding the pepper plantations would be “a mistake”. In 2015, when pepper had a price of about $12.15 per kg, Nhon expanded the plantation. However, the good prices did not last long, and instead reversed sharply at the end of 2019, dragging down to $1.4 per kg.

Back then, Nhon did not anticipate that the investment would not be sustainable and decided to sell some of his land as he did not want to work as a hired labourer in Ho Chi Minh City or the neighbouring province of Vung Tau like many other farmers in Gia Lai.

According to Gia Lai Department of Agriculture and Rural Development, the pepper growing area in Gia Lai amounts to nearly 16,300 hectares, while the plan for 2020 only listed 6,000 hectares.

In mid-2019, the State Bank of Vietnam gave pepper growers a way out to freeze debts for Gia Lai. At that time, banks restructured their debts and adjusted interest rates down to give out new loans and restore production.

Now, the conversion of a part of the old pepper-growing area to other crops has helped many farmers to become less dependent on pepper. Nhon still keeps a few quintals in stock that have not been sold yet as he believed, “pepper prices will continue to increase, helping to partially cover the rising costs of fuel, fertiliser, and labour.”

As the price increases, those farmers who still have pepper will eventually stop selling, which may affect the plan of export companies like Simexco Co., Ltd. As of October 31, the General Department of Customs stated that Vietnam only exported around 232,000 tonnes of pepper of all kinds, a decrease of 3.2 per cent compared to the same period in 2020.

Le Duc Huy, director of Simexco, confirmed the area for pepper cultivation has decreased by 20 per cent to around 130,000ha, resulting in a corresponding decrease in output. “I am now worried that the export volume will further decrease a lot due to very little stockpiles, and I’m not sure whether the prices will continue to increase.”

Dr. Tran Cong Thang, director of the Institute of Policy and Strategy for Agriculture and Rural Development, said that Vietnam has about 100,000ha of pepper plantations with an average yield of about 24.7 quintals per hectare, equivalent to an output of about 247,000 tonnes.

“The supply of pepper is continuing to be replenished as Vietnam is in the midst of a new harvest,” Thang noted. “However, though pepper prices have increased, they remain generally at a very low level, while production costs tend to increase.”

Pepper production costs in Vietnam in 2018 increased by at least 10 per cent compared to 2017, while the selling price of pepper decreased by over 30 per cent in that year, causing great difficulties for pepper growers. As a result, many importers have shifted their pepper supply structure to Indonesia, Malaysia, Sri Lanka, and Cambodia.

Source: VIR

19/12/2021 

https://vietnamnet.vn/en/business/bottlenecks-could-put-paid-to-pepper-801965.html

BLACK PEPPER MARKET INSIGHT WEEK 48 - PTEXIM CORP

INDIA
Pepper price up rapidly continues due to pandemic control better and huge demand in domestic.

INDONESIA
Indonesia's domestic and international pepper prices were stable this week after 3 consecutive weeks of increases due to the lack of market transactions.

MALAYSIA
Malaysian pepper prices fell due to the weakening of the Malaysian Ringgit against the USD (4.21 MYR/USD), down 1%. International pepper prices continued to be traded stably in the past 3 weeks.

SRI LANKA
domestic pepper prices continued their upward trend in the past 6 weeks.

BRAZIL
Pepper prices continued an uptrend in the past week. Freight rate is changing daily and it is not easy to find a booking.

VIETNAM
Last week, pepper prices had strongly increased at the beginning of the week, but then there was a slight correction because the market still lacked liquidity when the coffee market was still in an exciting stage.

Farmers and domestic agents continue to focus their financial budget on the coffee market, so the domestic pepper market is quiet.

However, the light berries pepper market for essential oil extraction is very busy with great demand in the domestic market/India and China.

Pepper for essential oil extraction has had an impressive increase of 5-6% in just the past week.

The Central Highlands is the main raw material area of Vietnam's pepper; Unfavorable weather , along with a shortage of workers when many localities have to take measures to prevent and control the Covid-19 epidemic, have affected the take care, harvesting and drying of coffee first in this crop year 2021/2022 and this will definitely affect the pepper crop 2021/2021 in the next couple month.

CLOVES - Decrease of Indonesian clove Exports in 2021

Nov 15, 2021

Decrease of Indonesian clove Exports in 2021 due to high freight costs and less harvest

Clove exporters from Sumatra, Java, Sulawesi reported a sharp decrease in 2021 export, especially in Q4 2021, with an estimated quantity of less than half of over 10,000 MT exported on the corresponding period last year.

Growers and exporters both attributed a lack of buying appetite to unforgiving freight costs combined with less harvest in 2021.

Indonesia 2020 cloves export is estimated to be over 40,000 MT which is much better than in 2019 at around 24,000 MT.

The price for lalpari grade is steady at the moment but predicted to steadily rise in line with the prediction of continuing climate challenges and recovered demands from clove cigarettes

--------------------------------

Written by
Paul Loemaksono

https://www.tridge.com/insights/decrease-of-indonesia-cloves-export-in-2021 

WHATSAPP +5511988027709
MAIL: peppertrade@olcom.com.br

PEPPER CROP & EXPORT 2021

 This information provided by PTEXIM VIETNAM

VIETNAM PEPPER & SPICES MARKET UPDATE – WEEK 45

 

VIETNAM PEPPER EXPORTS FROM JANUARY TO OCTOBER 2021

According to the General Department of Vietnam Customs, in October 2021, Vietnam exported 16,759 tons, with a turnover of 72.6 million USD.
Compared to September, export volume increased by 9.3%, turnover increased by 17.3%

Country          Quantity (MT)                  Value (USD)

America                        3,943                 $‎ 17,979,981

Germany                       1,080                 $‎   5,324,664

U.A.E.                            1,031                  $‎    4,116,715

Netherlands                    980                   $‎    4,451,531

Philippine                        662                  $‎    2,395,217

Korea                               613                   $‎    2,754,986

China                               546                   $‎    1,906,815

Egypt                               532                   $‎    2,319,704 

England                           498                  $‎    2,086,002

France                             479                   $‎     2,139,403

Others                           6,393                  $‎  27,090,446

TOTAL                      16,757                $‎  72,565,460

COMPARATIVE EXPORTS IN TON OF THE FIRST 10 MONTHS OF THE YEAR

Continent      JAN-OCT 2019      JAN-OCT 2020      JAN-OCT 2021

AFRICA                        8,884                     9,189                    6,290

AMERICA                   46,026                   50,284                  54,967

ASIA                          144,299                126,376                 115,757

OCEANIA                      3,141                     3,683                    4,440

EUROPE                     44,997                   45,990                  48,135

TOTAL                   247,347                235,522             229,580

EUROPE

In the European region, imports increased by 3.9%, lead by the German market: 10,310 tons, up 9%; Netherlands 8,164 tons, up 27.8%; UK: 5,043 tons, up 8.8%, France: 4,756 tons, up 27.9%... 

Imports decreased in Russia, Poland, Ukraine, Israel..

COMPARATIVE EXPORTS IN TON OF THE FIRST 10 MONTHS OF THE YEAR

Country    JAN-OCT 2019    JAN-OCT 2020    JAN-OCT 2021                 

Germany                  9,605                     9,463                   10,310

Netherlands            6,932                      6,390                     8,164

England                   3,982                       4,636                     5,043

France                     2,668                       3,718                     4,756

Russia                     4,936                       5,062                     4,727

Ireland                      6,043                       4,519                    4,132

Spain                        2,174                       2,354                     2,503

Poland                      2,403                       2,871                     2,104

Ukraina                    1,686                        1,592                     1,366

Italy                              823                           755                        876

Others                      3,572                         4,144                    3,979

TOTAL                    44,824                        45,504                 47,960

AMERICAS

Imports of the Americas increased by 8.9%, of which the US was the largest importer of Vietnam's pepper with 50,939 tons, up 8.9% over the same period. 

Exports increased sharply in the markets of Canada, El Salvador, Dominica, Venezuela…and decreased in Mexico

COMPARATIVE EXPORTS IN TON OF THE FIRST 10 MONTHS OF THE YEAR

Country    JAN-OCT 2019    JAN-OCT 2020    JAN-OCT 2021

USA                        43,102                  46,765                    50,939

Canada                    2,248                     2,303                      2,837

Mexico                        447                        866                         638

El Salvador                121                        134                          298

Guatemala                 108                         216                          255

Jamaica                     173                         486                          175

TOTAL                   46,199                    50,770                     55,142

ASIA

In Asia, imports decreased by 9.7%, of which China's imports decreased by 16.5% to 37,283 tons. 
Imports of Saudi Arabia increased sharply by 35% to 14,610 tons and continued to be Vietnam's second largest pepper import market in Asia. India's imports 11,382 tons, up 1.2%; Pakistan: 9,877 tons, up 8.5%; Korea: 5,417 tons, up 7.7%, ... 

Import markets decreased: Thailand, Japan, Myanmar, ..

COMPARATIVE EXPORTS IN TON OF THE FIRST 10 MONTHS OF THE YEAR

Country    JAN-OCT 2019    JAN-OCT 2020    JAN-OCT 2021 

China                      54,649                  44,674                    37,283

U.A.E                         9,478                  10,825                    14,610

India                        17,785                   11,251                    11,382

Pakistan                   9,389                     9,100                      9,877

Korea                        4,093                     5,028                      5,417

Philippine                 4,947                     5,598                      5,371

Thailand                   6,161                      4,600                      3,890

Iran                            5,187                      3,320                      3,759

Turkey                       4,801                      3,073                      3,648

Japan                        2,616                      3,055                      2,872

Others                     18,734                    18,076                    12,411

TOTAL                   137,840                   118,600                  110,520

AFRICA

The African region's imports decreased by 31%, of which Egypt decreased by 32.7% to 5,237 tons. Imports also decreased in South Africa, Senegal, Gambia, Tunisia, Sudan, etc.

COMPARATIVE EXPORTS IN TON OF THE FIRST 10 MONTHS OF THE YEAR

Country    JAN-OCT 2019    JAN-OCT 2020    JAN-OCT 2021

Egypt                        6,459                      7,776                   5,237

South Africa         2,702                       2,630                  2,410

Senegal                    2,901                       2,279                  1,261

Gambia                        807                       1,103                     896

Tunisia                         435                          491                     364

Others                       2,039                       2,686                  1,359

TOTAL                     15,343                      16,965                11,527

MARKET & PRICE TRENDS

Price continued to have downward corrections during this week with a corresponding decrease of nearly 2%. Here the reasons why: 

1- There is a large domestic company that is trying to drive the market by selling lower prices on the market but immediately buying in larger quantities in the past week for November and December shipment through different dealers/ traders. (sell cheaper prices for small quantities but buy bigger quantities at market price). This has also caused a bearish correction

2- Financial being tight and cash flow when coffee crop is in main season. Dealers' priority is to do the coffee business when the current market is very attractive. Exporting manufacturers also sell inventory to increase the temporary budget when export cash flow is very slow due to congestion and shipping cargo longer than usual

3- In addition, Domestic speculation has taken profits during the past time. This also causes the carry over 2021 to become less, while the export volume in November & December is expected to be around 25 - 30,000 tons

4- The Vietnamese dong is still trending and the appreciation against the USD also makes the converted pepper price more expensive.

SUMMARIZING

Demand for pepper continues to be active in the US and EU markets both prompt and further shipment in Q1 & Q2/2022.

China continues to cover very slowly and it is possible that the import volume of pepper from China will be the lowest in the past 3 years, although the information we have received, the stock in China decreased rapidly in recent times.

End of December some small quantities will be available on the market. However, it will be very limited in December & January 2022. The pepper crop in 2022 continues to be delayed compared to previous years and it is forecasted that the main harvest will only be in March & April 2022

RGT Pepper Market Report Week 44/ 2021

 

Vietnam – after historic week over week extended gains, week 43 went a topsy turvy session wrapping the October month at level 88000 VND/kg with few shippers actively covering. By mid-week, latter went back into sideline, displaying another dull market scenario ending month. 

Overall, October month displayed almost 8% increased from its start off, reaching highs of almost 9% from September month this year. 

Week 44, beginning week of November pricing level of raw material were seen from 88000-87000 VND/kg with few sellers trying to bid as low as possible but then each time demand arises, market stood firm on its level. 

New Crop 2022 – would likely to pose a challenge to farmers with a harvest delay of about two (2) months due to shortage of manpower attributed to the delay of coffee harvest period this coming Dec/January.

Indonesia – firm in its stance until today with indicative price that is about $4400 FOB for Lampung. 

Muntok White boosted at level $7100-7300 FOB an alleged lacking supply from farmers’ side with almost remaining volumes suspected to be with big speculators. Furthermore, rumors circulating that next year crop will again drop with at least 30% compared to this year. 

Brazil – Week 43 - while Northern Crop harvest is ongoing, demand continues to advance in good volume with price ranging from $4100-4300 FOB from Espiritu Santo seen with raw material at supportive level of R$19-19.50/kg. On the other hand, from Para, pricing level is now at premium of R$21.50/kg level. 

Our Take-Away View
Reaching week 44, with Vietnam market cooling down, demand slows down for Brazil with offers remaining firm.

Market remains generally strong despite moments of  softness. In fact, it is times like this that should be seen as a potential window of buying opportunity with current supply and new crop expectations that are both not too promising. 

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